Stocks markets across Asia were in positive territory as of Wednesday, July 1, in spite of the lingering Greek debt crisis. However, the Shanghai Stock Index was down by around five percent despite additional incentives provided from the government.

A lot of the markets in Asia, Europe and the U.S. made considerable gains as many investors believed that the debt crisis in Greece will soon be over. Stocks in Japan, Hong Kong, South Korea and Australia managed to made some gains. One notable exception is China.

Like Us on Facebook

Bloomberg Business reported that stocks in the Shanghai stock market has rebounded by more than 5 percent last Tuesday, June 30. The next day however, Chinese stocks slid back to negative territory losing the gains it had made.

Chinese stock market regulators have made a series of announcements in a bid  to make tradiing in Chinese stocks easier. Authorities have decided to let pension funds to participate in the stock market. The stamp tax rate may also be lowered.

According to CNBC, the Chinese government announced last Wednesday that the regulations with regards to margin debts have been relaxed in order to encourage the stock trade. Margin debts are loans used to buy stocks.

Last week, The Chinese Central Bank cut the one year deposit and lending rates to its lowest level yet after Chinese investors engaged in a two weeks selling spree.

Nomura strategist Michael Kurtz, said that investors in the Chinese stocks are not satisfied with the incentives provided by the Chinese government.

Despite the current lackluster performance of the Shanghai Index, it is still one of the top stock market performers, according to the Washington Post.

Many of Chinese stocks are now being viewed as overvalued. Ironically, the large numbers of margin debts in the Shanghai Composite is seen as one of the main reasons that worries investors.

A number of equity fund managers believe that Chinese stocks are now affordable and have encouraged investors to come back into the market. They have also pointed out that the Chinese government continues to provide incentives to prop the stock market.

After years of double digit economic growth, China's growth target for this year stands at seven percent. Many economic experts believe that this relatively low target may not be attainable.

Another issue that could possibly dampen the recovery of the Chinese stock market is the unfolding debt crisis in Greece. Polls suggest that Greek voters may reject the creditor's proposals in the upcoming referendum this July 5.

TagsShanghai Stock Exchange, Shanghai Composite Index, Asian stocks, chinese securities, chinese regulators, margin debt, margin buying, China stock market