HONG KONG – A dramatic plummeting in the value of publicly listed shares in Mainland China over the last month has wiped out roughly $3 trillion in wealth and raised fears of a collapse in the country's stock market, a collapse that could exacerbate slowing economic growth.

A marketwide rebound of almost 6 percent July 9 could mark the beginning of a turnaround, but it did little to offset weeks of sharp losses.

Panicky investors, many of them individuals who had been encouraged to invest on margin by a loosening of rules earlier this year, have fled the market en masse since the middle of June. The losses have been steep and the drop is the biggest since the launch of the Shanghai stock market in 1992.

"The sharp drop is not caused by the performances of the companies but the general market trend right now," Zou Peng, an analyst at China International Capital Corp., told BioWorld Asia.

The fear that has led investors to sell off is not linked to any one sector or event but rather with the market as a whole, said Zou.

The sell-off was then exacerbated by margin calls on leveraged investing. Earlier this year, Chinese regulators opened the door for individual investors to borrow money from stock brokers to invest in shares.

Shares were also buoyed by the Shanghai Hong Kong Stock Connect scheme, which opened Shanghai's stock market to Hong Kong investors. A similar program is in the works for Shenzhen.

The various moves led to a stellar performance by Chinese bourses. The Shanghai Composite Index rose about 60 percent from Dec. 31 to its June 12 peak of 5,178.

That performance led to warnings that a bubble was forming and could burst at any time. The burst came just days later.

The volatility has been intense, with single-day drops of as much as 8 percent and many companies dropping by the maximum 10 percent in a single day. For example, the Shanghai Composite Index slid 5.9 percent to 3,507.192 on July 8.

And biotech companies have not been immune to the drops.

"It has affected all sectors, not just [the] health care sector," said Ocean Pan, analyst at GF Holdings Hong Kong.

Almost all listed companies have been hit, including biotech and medtech.

Tasly Pharmaceutical Group Co. Ltd. (SH:600535) dropped from a high of ¥55.57 (US$8.95) on June 15 down to ¥38.46 on July 8 before bouncing back to ¥42.31 Thursday.

Walvax Biotechnology (SH:300142) has been spared the carnage. The company had suspended trading on June 16 pending a shareholder deal announcement.

Vaccine maker Chongqing Zhifei Biological Products (CH:300122), which is listed in Shenzhen, was trading at ¥44.80 on June 11 but closed at ¥19.80 Thursday, down by half in less than a month.

Shanghai Fosun Pharmaceutical Group (SH:600196) dropped from ¥35.99 on June 10 to ¥21.87 on July 8 before bouncing back to ¥24.3 Thursday.

STOPPING THE BLEEDING

In an effort to contain the slide, the government has introduced a raft of measures that could have an impact on company performance in the long term.

One such measure is a ban on sales of shares by shareholders with stakes greater than 5 percent in any one company. Another is a ban on new IPOs on both the Shanghai and Shenzhen stock exchanges that took effect on July 4 and is open-ended. The aim of the ban is to prevent investors from selling shares of companies that are currently listed to invest in new offerings. The ban has had a definite effect on the IPO pipeline for the rest of the year.

Other measures have seen the China Securities Regulatory Commission (CSRC) put plans in place to buy shares of large companies, mostly state-owned, which have benefited disproportionately. Other companies have resorted to halting trading to stem the bloodletting.

"The rout will have a negative influence on IPOs," said Pan. "Hong Kong IPOs will be influenced as well since the overall environment is not good."

And the rout has extended to Hong Kong, where the Hang Seng Index dropped 14 percent from 27,404 on June 24 to 23,516 on July 8, when it dropped by almost 6 percent in a single day before rising by 5 percent on July 9 to 24,392. The drop on July 8 was the largest in a single day since 2008.

Some Hong Kong-listed companies have seen wild swings in their share values.

Sinopharm Holdings Co. Ltd. (HK:1099), China's biggest pharmaceutical and medical device enterprise in China, dropped from a high of HK$31 (US$3.99) to HK$29.55 on July 8. Sinopharm closed July 9 at HK$30.65.

Another biopharma listed in Hong Kong is Shenyang-based 3Sbio Inc. (HK:1530), which went public last month. Shares dropped to HK$8.25 from a high of HK$10.56 on June 23.

Struck by the rout even harder, another traditional Chinese medicine company, Guangzhou Baiyunshan Pharmaceutical Holdings Co. Ltd. (HK:00874), dropped HK$2.45, from HK$22.85 to HK$20.40, almost an 11 percent fall on July 8. It bounced back to HK$23.75 on July 9.

Luye Pharma (HK:02186) closed at HK$7.66 on July 7 and dropped 4.4 percent to HK$7.32 before bouncing back on July 9 to HK$7.72.

Meanwhile, Chinese regulators say they will support the market, and the People's Bank of China said July 8 it would provide "ample liquidity" to the country's stock market.

Last week, the overall market rose sharply but a lot of companies remain suspended and it is difficult to say whether sentiment has turned.