Regulator vows to keep stability in stock market
Print Edition
CHINA’S market regulator yesterday made a long-term commitment to stabilizing the stock market for a “number of years,” in what analysts said was an attempt to boost weak investor sentiment.
The China Securities Regulatory Commission (CSRC) said the state-backed China Securities Finance Corp (CSF), which is tasked with buying shares on behalf of the government, will have an enduring role.
“For a number of years to come, the China Securities Finance Corp will not exit (the market). Its function to stabilize the market will not change,” the CSRC said in a statement on its microblog.
CSF has played a crucial role in China’s stock market rescue, which was launched after Shanghai’s benchmark index crashed 30 percent in three weeks from the middle of June.
Authorities gave the CSF huge funding to buy shares, and subsequent speculation that the government was preparing to withdraw from the stock market has spooked investors.
The regulator’s comments were the first time it has given any indication of how long it would intervene to support equities.
Analysts said the CSRC was looking to shore up sentiment, even at a time when the market is stabilizing.
“Although the strength of market-saving measures by government bodies is decreasing, in order to keep investors’ confidence in the market and prevent dramatic volatility, the CSF is showing it will step in when necessary,” said Phillip Securities analyst Chen Xingyu.
The CSRC statement added the CSF will enter the market only at times of volatility.
“When the market drastically fluctuates and may trigger systemic risk, it will continue to play a role,” the statement quoted spokesman Deng Ge as saying.
CSF has transferred some of its stock to state-owned investment company Central Huijin Investment Ltd to be held long-term, it said.
Other government moves to prop up shares have included barring “big” investors from selling their stakes and cracking down on short selling.
Stocks closed up 0.3 percent yesterday, capping their biggest weekly gain in two months as investors bet a surprise devaluation of the yuan this week augured more measures from Beijing to boost sagging economic growth.
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