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Saturday 18 October 2008
Shang Says Beijing Will Roll Out Measures to Boost Stock Markets
The central government is planning undisclosed policy measures to boost its ailing equity markets and defuse mounting hostility from investors who have seen the value of their shares dive in recent weeks.
Shang Says Beijing Will Roll Out Measures to Boost Stock Markets
Daniel Ren in Shanghai 18 October 2008
The central government is planning undisclosed policy measures to boost its ailing equity markets and defuse mounting hostility from investors who have seen the value of their shares dive in recent weeks.
Shang Fulin, the chairman of the China Securities Regulatory Commission, told a conference in Beijing yesterday the government would unveil new incentives to stabilise the markets, but did not elaborate, Bloomberg reported.
It is the first time in three months Mr. Shang has made public comments about the equity markets, where millions of investors have been left licking their wounds after a 63.31 per cent drop in share prices this year.
His remarks helped the Shanghai Composite Index end a three-day losing streak yesterday. It rose 20.71 points or 1.08 per cent to 1,930.651.
At the end of July, Mr. Shang said his agency would focus on market stability ahead of the Beijing Olympics. Investors and analysts had blamed government inertia for the markets’ sharp decline.
“The government now thinks it is necessary to intervene in the troubled markets and it is wasting no time in launching more stimulatory measures,” said Guotai Junan Securities analyst Zhai Peng.
“The question is what else they can work out soon to buoy the markets efficiently.”
Beijing took drastic steps to lift the markets last month, scrapping the stamp duty on stock purchases and encouraging state-owned companies to buy A shares at what it said were low valuations.
But a 21 per cent gain between September 18 and September 25 was wiped out as the A-share market followed global markets sharply lower at month’s end.
Analysts said Beijing now believed intervention was not necessarily an evil, after United States and European regulators unveiled unprecedented plans to rescue their troubled markets.
The market is speculating that the government may launch a stabilisation fund to stem the decline, but sources said Beijing had yet to map out a detailed plan for the long-expected fund.
On October 5, one day before the markets reopened after a week-long suspension for the National Day holiday, the CSRC announced it would launch margin lending and short selling to shore up liquidity.
Sources said 11 top brokerages would conduct mock trading of the new tools on October 25 as Beijing sped up preparations for their introduction next month.
The CSRC was expected to let the country’s top five brokerages start margin lending on a trial basis, and that was likely to bring 60 billion yuan (HK$68.1 billion) in fresh funds to the markets, said Liang Jing, a Guotai Junan analyst. “It is of only psychological effect, however, and won’t be enough to drive up the markets.”
Analysts said confidence was expected to be restored once the economic outlook became clearer.
“No market-moving measures will work, given the bleak economic outlook,” said GF Securities analyst Wu Youhui.
“All eyes will be on macroeconomic policies that are designed to solve this fundamental problem.”
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Shang Says Beijing Will Roll Out Measures to Boost Stock Markets
Daniel Ren in Shanghai
18 October 2008
The central government is planning undisclosed policy measures to boost its ailing equity markets and defuse mounting hostility from investors who have seen the value of their shares dive in recent weeks.
Shang Fulin, the chairman of the China Securities Regulatory Commission, told a conference in Beijing yesterday the government would unveil new incentives to stabilise the markets, but did not elaborate, Bloomberg reported.
It is the first time in three months Mr. Shang has made public comments about the equity markets, where millions of investors have been left licking their wounds after a 63.31 per cent drop in share prices this year.
His remarks helped the Shanghai Composite Index end a three-day losing streak yesterday. It rose 20.71 points or 1.08 per cent to 1,930.651.
At the end of July, Mr. Shang said his agency would focus on market stability ahead of the Beijing Olympics. Investors and analysts had blamed government inertia for the markets’ sharp decline.
“The government now thinks it is necessary to intervene in the troubled markets and it is wasting no time in launching more stimulatory measures,” said Guotai Junan Securities analyst Zhai Peng.
“The question is what else they can work out soon to buoy the markets efficiently.”
Beijing took drastic steps to lift the markets last month, scrapping the stamp duty on stock purchases and encouraging state-owned companies to buy A shares at what it said were low valuations.
But a 21 per cent gain between September 18 and September 25 was wiped out as the A-share market followed global markets sharply lower at month’s end.
Analysts said Beijing now believed intervention was not necessarily an evil, after United States and European regulators unveiled unprecedented plans to rescue their troubled markets.
The market is speculating that the government may launch a stabilisation fund to stem the decline, but sources said Beijing had yet to map out a detailed plan for the long-expected fund.
On October 5, one day before the markets reopened after a week-long suspension for the National Day holiday, the CSRC announced it would launch margin lending and short selling to shore up liquidity.
Sources said 11 top brokerages would conduct mock trading of the new tools on October 25 as Beijing sped up preparations for their introduction next month.
The CSRC was expected to let the country’s top five brokerages start margin lending on a trial basis, and that was likely to bring 60 billion yuan (HK$68.1 billion) in fresh funds to the markets, said Liang Jing, a Guotai Junan analyst. “It is of only psychological effect, however, and won’t be enough to drive up the markets.”
Analysts said confidence was expected to be restored once the economic outlook became clearer.
“No market-moving measures will work, given the bleak economic outlook,” said GF Securities analyst Wu Youhui.
“All eyes will be on macroeconomic policies that are designed to solve this fundamental problem.”
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