Extreme Volatility Normal in China Stock Markets

China is now home to the world’s largest equity markets after the US. Yet extreme volatility is still typical, with benchmark indices often swinging as much as 10 per cent in a matter of hours.

On one day in June, more than $700 billion was wiped off the value of Chinese stocks. Here are some of the main reasons for the volatility.  What is the investor profile behind China’s equity market?

Retail punters account for 80-90 per cent of trading in the Chinese equity markets. Many of them are new to investing — in May alone more than 14 million trading accounts were opened. That means millions of people trading stocks have little or no direct memory of the 2007-8 stock market bubble and crash.


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.