Wild swings in China stocks this week

A rocky start for China stock in this new month as their stock market plunge yet again.

Based on the report by CNN, Shanghai Composite index fell 4.2% at the opening bell while Shenzhen Composite index opened 5% lower at the same time.

While elsewhere in the region, the Hong Kong's Hang Seng and Japan's Nikkei are facing the same problem too but with less volatility, their index only fell 1.3% and 0.4% respectively.

The situation may have been caused by the new report released by the government showing a weak growth in their manufacturing report. According to the report, the manufacturing in China had dropped to a three-year low with no increase in both current and future orders. This has caused investors to become more cautious about the market strength.

China authority is taking all the required measure to curb the stock market from going worse with more cash injected by the central bank and new order to all state-backed brokerage to begin systematic buying of shares to support the index.

However, JK Life Insurance's fund manager Wu Kan told BBC that investors have lost confidence in the market and the correction is still going on. According to him, there is a high possibility that the stock will plunge more in the coming weeks.

China stock has seen a super bull run for the past months where the stock had risen up to 150% in value. However, since the June 12 peak this year, the stock market have lost almost 40% in their value according to BBC.

Loss of confidence can also be felt in the commodities sector as the price for future oil contract is also going down during the Asian trading time according to The New York Times.

Investors started to lose confidence in China after the government decided to devalue their renminbi despite a good growth report as this signal something is going wrong with the economy. The International Monetary Fund also had changed their view and warned investors about the moderate growth of world economy in the coming month.

The sell-offs might not be over for this week since the market will be closed for two days starting Thursday to mark the end of World War Two.

The only good news that can be expected soon is the rate hikes that might be announced by the Fed this month which could bring back some confidence to investors in the current economic situation during this volatile season.