Market turmoil caused by the mothers market collapse is set to return after the market closed on Wednesday morning, with many expecting it to hit new highs again soon.
According to data from the China Securities Regulatory Commission (CSRC), the Shanghai Composite Index (SCI) lost nearly 12 per cent of its value on Tuesday.
It was down around 2 per cent on Monday and more than 8 per cent over the past week.
At least 14 other index funds have suffered losses as well, with some having lost more than 20 per cent in a day.
The Chinese economy has slowed to a crawl, and it is unlikely that the Shanghai Stock Exchange will regain its previous level of activity, as analysts expect a further contraction.
The market was once among the most volatile in the world, but the latest market crash has created a market downturn that has left the markets market in a deep dive.
The Shanghai Composite fell more than 12 per, according to data compiled by Bloomberg.
In a market that is supposed to be the safest in the financial world, the CSRC data show that it has been severely impacted by the Mothers Market collapse, which is expected to hit a new all-time high this week.
“The Shanghai Stock Market has lost nearly a third of its total value since the opening bell, the biggest drop in a single day since April, when the market was at a record low,” the CSrc said.
“This new market turmoil, coupled with the lack of liquidity and strong economic activity, have severely affected the Shanghai market, leaving many investors and traders to speculate.”
Investors are now scrambling to sell off their holdings and find buyers, with one major fund selling all its assets and another holding more than 40 per cent.
This is what has happened to Shanghai Stock market.
Market watchers have been shocked by the market crash, which saw the Shanghai stock market plunge more than 13 per cent to a new low of 9,904.70, with the biggest losses on Monday.
Analysts have also been warning that the market could be on the brink of another collapse.
Some of the biggest selling centres have been in Hong Kong and Macau, but there have been no signs of this happening in Shanghai.
What has happened in Shanghai is a complete collapse in liquidity and a market collapse,” said Lee Woon-won, a Hong Kong-based analyst at CCS Insight.
For a time, it looked like the Shanghai index was in freefall.
But as markets closed, it began to reverse course.
Its biggest fall was the S&P 500, down 2.6 per cent at 1,811.20, and the Nasdaq Composite, down 1.4 per cent, at 4,539.35.
On Wednesday, the Shanghai Index is expected return to its previous record level of 8,959.88.
After the Shanghai collapse, many investors are still waiting for the Shanghai Market to regain its former level of performance.
Meanwhile, there have also recently been reports of people having problems buying and selling stock.
Many traders are being forced to close their accounts and are struggling to get their funds into a position to make money from trading.
Even if it does recover to its old levels, the market is likely to see a rebound soon.