(MENAFN- Saudi Press Agency) China shares fell again on Thursday after a report that banks were trying to get to grips with their financial exposure to the stock market slump in June added to a pall of uncertainty for investors, Reuters reported.
Concerns about the level of borrowing to fund market positions have been magnified by the grey market - a loosely regulated network of state-owned commercial banks, trust companies, fund managers, and grassroots finance firms.
If banks decide to rein in their exposure to the stock market, it could squeeze a line of credit for potential buyers and so undermine confidence in a price recovery.
The benchmark CSI300 index of the largest listed companies in Shanghai and Shenzhen closed down 2.9 percent, while the Shanghai Composite Index closed down 2.2 percent.
Monday's shock drop jolted markets and traders said many investors are now waiting on the sidelines to see if prices stabilise before they will buy shares again. The exact reason for the fall remains a mystery.
One explanation may come from money markets. Authorities had pumped a net 85 billion yuan ($13.7 billion) into money markets at the end of June, just as they were trying to stop a free-fall in share prices.
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