China freezes IPOs as stock markets nose-dive

 
Jessica Morris
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The Shanghai Composite Index has lost nearly a third of its value since mid-June (Source: Getty)

China has reportedly stepped up efforts to stabilise its tumultuous stock market by suspending initial public offerings and creating a market stabilisation fund.

The world's second-largest economy halted new share offerings yesterday according to the Wall Street Journal. This could improve liquidity because large amounts of money are frozen when subscriptions are taken, diverting it away from current listings.

Read more: China's equity markets have rocketed: Bubble waiting to burst or the market unleashing its true potential?

Hours earlier major brokers and fund managers had collectively pledged to invest at least $19bn (£12bn) of their own money into the battered stock markets - as part of the market stabilisation fund.

The move comes as Chinese officials worry that stock market chaos could spread to other parts of the economy - the benchmark Shanghai Composite Index has lost nearly a third of its value since mid-June.

It follows other unsuccessful attempts to reassure investors such as an interest cut by the central bank, a relaxation of margin-lending rules and additional bank liquidity.

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