The Chinese government has been scrambling over the last few days in an attempt to stave off a massive stock collapse similar to the 1929 U.S. stock market crash which caused the Great Depression.
The Wall Street Journal said Wednesday that it appears the Chinese government is losing control of the market despite efforts to stop the slide. The stock market has already begun to impact other parts of the Chinese economy, with the country’s bond and currency markets starting declines.
The Shanghai Composite Index (SCI) fell 5.9% on Wednesday and has lost 33% of its value since a peak on June 12. The total of the loss, $3.5 trillion, is nearly five times the value of computer giant Apple, Inc.
“Beijing’s latest bid to calm the market has had the opposite effect,” said Bernard Aw, market analyst at IG Group, told the Journal. “The panic is spreading, and authorities appear to be grasping at straws to hold back the tide.”
While most of the world is focused on Greece, which as a nation has a gross domestic product for a year that totals only 13% of the losses on the Chinese stock market since June 12.
“China’s stock market had become detached from the reality of China’s own economy, and appallingly overvalued,” Patrick Chovanec, managing director at Silvercrest Asset Management, posted on Twitter.
Chinese government officials pushed more money to brokerage houses Wednesday in an attempt to prop up the market. Over 1,300 Chinese companies, almost half the total in the market, have suspended their stock trading.