China shares violent sell-off week 4-8 Aug

In the week between 4-8 Aug 2008, there is a massive sell-off in China shares. (Note that China Olympic is on 8 Aug 2008.)

On the surface, the obvious explanation is the continuing fall in the oil price, which has triggered a drop in the price of other commodities and, thus, commodity stocks.

However, there are market rumours reporting that funds are choosing the most liquid stocks to sell, and commodity stocks are among the most liquid of the China stocks.

Is there something else that the market knows about the H-shares that we don't which triggers the massive sell-off?

Market grapevines says that the common one was that foreign funds wanted to show their lack of confidence in China's economic prospects after the Olympics and thus were selling heavily, particularly on the day of the official opening of the Games.

Rumours also attributed the recent heavy selling to the big financial institutions in the US as they are in serious need of cash to shore up their capital.

(The above are unconfirmed news as we are unable to further verify its accuracy.)