China vows to stabilise markets after rout, offers no detail
CHINA pledged to stabilise markets after shares sank to a five-year low in chaotic trading on Friday (Feb 2), but policymakers offered no specifics on how they plan to end a sell-off that’s erased more than US$6 trillion of value and dented confidence in the world’s second-largest economy.
The China Securities Regulatory Commission (CSRC) vowed on Sunday to prevent abnormal fluctuations, saying it would guide more medium- and long-term funds into the market and crack down on illegal activities including malicious short selling and insider trading.
The brief statement followed a sudden plunge of as much as 3.4 per cent in the benchmark CSI 300 on Friday – and an outpouring of frustration on social media from individual investors just days before families across the country gather to celebrate the Chinese New Year.
While authorities have taken piecemeal steps to support the economy and markets in recent months and have discussed a potential stock stabilisation fund, they have yet to announce any major moves to put an end to the sell-off. Weak economic data, simmering geopolitical tensions with the United States, a worsening property crisis and an opaque crackdown on the financial sector have all weighed on investor sentiment.
The CSI 300 tumbled 6.3 per cent in January, a record sixth straight month of losses. Shares rallied briefly towards the end of the month after Bloomberg reported that authorities were seeking to mobilise about two trillion yuan (S$378 billion) for a stabilisation fund, but the market has since renewed its decline, reaching the lowest level since January 2019.
Authorities should set up a stabilisation fund as soon as possible to boost market confidence, with an aim to get its size to 10 trillion yuan or more, the 21st Century Business Herald daily newspaper reported over the weekend, citing Liu Yuhui of the Chinese Academy of Social Sciences, a government think tank.
In a sign of how exasperated some investors have become, thousands flocked to a social media account of the US embassy in Beijing to vent their frustrations over the economy and slumping share prices.
In the comment section of the embassy’s Weibo post on giraffe protection on Friday evening, some 53,000 users added remarks by Saturday evening, winning over 300,000 likes. China’s Internet users often struggle to find a venue to air grievances about the economy or government performance, with official accounts of Chinese state agencies or media usually either disabling the comment function or only showing selected feedback.
For example, no comments were displayed under a Friday Weibo post by the CSRC about a State Council meeting on improving the business environment. BLOOMBERG
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