Mainland shares choppy
Violent swings magnified in China's major stock indexes in the afternoon trading session, with the benchmark Shanghai Composite meandering between gains and losses before closing down 0.4 percent, as regulators step up rescue measures to support a wobbly stock market, albeit in a confusing manner.
Earlier in the session, the key Shanghai index fell as much as 4.6 percent to an intra-day low of 3,019.0 before a wave of buying in late-morning trade pushed up prices in many sectors. Large-cap stocks such as infrastructure plays and banks ended the session higher, amid speculation that government-backed investors intervened.
"Investors are still on an exit mode... they do not want to hold shares before a long weekend. But at the same time, the "national team" is buying in to support the index above the 3,000 level because they need a stable environment during the long weekend," Ronald Wan, chief executive, investment banking at Partners Capital International, told CNBC Asia's "Squawk Box."
Among China's other indexes, the blue-chip CSI300 ticked up 0.11 percent, while the smaller Shenzhen Composite closed down 2 percent. Markets will be closed through Monday as China commemorates the end of World War II.
Meanwhile, Hong Kong's Hang Seng index fell back into the red, down over 1 percent.
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Nine Chinese brokerages have pledged additional funds worth over 30 billion yuan ($4.71 billion) to buy shares, Reuters reported citing the China Securities Journal on Wednesday. This followed news that major Chinese brokerages such as Guotai Junan Securities are stepping up their contributions to support the stock market yesterday, according to filings on the Shanghai Stock Exchange website.
But according to Wan, the additional funds from securities firms may be "insignificant" to change the longer-term trend.
"It may have some sort of a psychological impact in terms of stabilizing the mentality of investors, but if you look at the figures, even if they contribute 25-30 billion yuan, the amount is still insignificant to the size of the stock market. Also, the brokerages have lost tremendous money previously so I'm not sure how much they can put in to stabilize the market," Partners Capital International's Wan added.
Other fresh developments include a report by the China Business News that securities regulators have urged brokerages to clean up "grey market" margin lending by the end of September. Meanwhile, the People's Bank of China (PBOC) plans to tighten rules on trading of currency forwards from mid-October, with sources telling Reuters on Tuesday that banks trading currency forwards will be required to set aside reserves from October 15.
The series of contradictory policy measures is fanning confusion among investors, who are already reeling from a stock market rout which started in mid-June due to Beijing's crackdown on margin lending.
Xavier Denis, global strategist at SG Securities, said: "The market is [concerned] more about the policy-making and a lack of clarity when it comes to policy intervention."
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