OREANDA-NEWS  Shares of Chinese companies accelerated their decline in the last week, the Shanghai Shanghai Composite index showed its worst result in five years as a result of panic sales and forced liquidation of individual transactions, RIA Novosti reports.

On Friday, it fell by 1.5 percent, and at the end of the week the drop was 6.2 percent — this is the worst result since October 2018. The main Chinese CSI 300 index closed trading down 1.2 percent, updating the minimum since January 2019.

Jan Delong, Chief Economist at First Waterfront Fund Management, stressed that the downward trend in the market is only intensifying and is becoming a "snowball". Government investors tried to stop the collapse, for example, exchange-traded funds associated with the Central Huijin fund actively bought shares in the last hours of trading.

Dennis Young, a professor of business administration at the Darden School of Business at the University of Virginia, believes that such measures will not restore the trust of global investors, and it will not be possible to resort to them indefinitely. According to him, Beijing should solve the fundamental problems of its economy, and not flood the fire with liquidity.

Morgan Stanley analysts agree with this approach, pointing out that the enthusiasm for government stimulus turned out to be short-lived, and economic data continue to confirm the pessimistic mood.

Earlier, experts noted that the decision of the People's Bank of China to reduce the reserve rate by 50 basis points for commercial banks from February 5 encouraged investors, because such a measure allows organizations to free up about a trillion yuan ($140 billion) to support the market.

But the macroeconomic statistics released later blocked the positive effect. In particular, the manufacturing activity index (PMI) disappointed. After the fourth consecutive monthly decline, it reached 49.2 points (an indicator below 50 points indicates a decline).