[00:00.00]From VOA Learning English, this is the Economics Report.
[00:05.42]The last two months have been difficult for investors in China's stock markets.
[00:12.36]Major stock indexes, measures that track share values, all had big decreases during the month.
[00:21.92]This has many people questioning what China's stock market problems mean for its economy and the world.
[00:31.23]On July 27th, the Shanghai Composite index dropped more than eight percent in value, its largest single-day drop in eight years.
[00:43.68]In recent weeks, prices dropped although the government put a number of measures in place to keep prices from falling too far.
[00:54.96]These included lending billions of dollars to stock trading companies,
[01:01.49]having pension funds increase stock holdings and threatening short-sellers with legal action.
[01:09.70]Short-sellers make a profit by trading stocks that are decreasing in prices.
[01:17.47]The state China Securities Finance Corporation on Tuesday said it will continue to buy stocks to "stabilize" the market.
[01:28.69]The People's Bank of China also said it would place over $8 billion into money markets funds, which are considered safe debt investments.
[01:40.81]Companies have also cancelled plans to sell new shares on exchanges and, at one point, more than 1,400 companies requested that trading in their shares be halted.
[01:57.46]However, China's stock market is not closely connected to its economy.
[02:03.69]The Associated Press recently reported on a study by the Southwestern University of Finance in Chengdu, China.
[02:14.05]It said only 8.8 percent of households in China are involved in the market.
[02:21.71]That is much lower than the 30 percent of households in the U.S. with investment in the market.
[02:29.91]Many of the companies listed on Chinese markets are state-owned companies.
[02:37.21]Investors react to changes in government regulations and to availability of financing for trading.
[02:46.53]This can mean that share prices do not follow the economic performance of the companies that issue them.
[02:55.77]In the twelve months before June, China's stock market measures gained about 150 percent.
[03:04.92]At the same time, China reported lower economic growth during the same period.
[03:12.16]China's share price drop has had a limited effect on stock exchanges around the world.
[03:19.83]Stock indexes in Europe and Asia have had decreases in July.
[03:26.71]But, China limits the number of stocks that foreign investors can buy through a link called the Shanghai-Hong Kong Stock Connection.
[03:38.01]In the case of China, that means money from foreign investors cannot easily flow in or out.
[03:47.36]Some experts say recent losses could be a sign that Chinese investors are worried that the government plans to reduce its support for the market.
[04:00.00]I'm Mario Ritter.