Across The Border | Intervention surely looms as mainland’s benchmark stock index risks slipping below 3,000
A slumping stock market carries the risk of triggering more than just financial losses... the knock-on can be socially damaging too, if it involves life savings slated for children’s education, health care or future pension provision
Fear is gaining ascendancy over greed, as a worsening liquidity drain weighs heavy on A-share investors.
As the mainland’s benchmark indicator edges closer to the psychologically important 3,000 level, all eyes are on what steps the state’s financial authorities will take to underpin the market, and shore up investor confidence.
The Shanghai Composite Index actually edged higher on Wednesday, ending at 3,064.08 – only 11.3 points, or 0.4 per cent ahead of this year’s lowest close of 3,052.78.
But traders now expect the gauge to fall below the 3,000-point level – generally viewed as the market’s own “boom-or-bust” threshold – in the coming weeks as investors continue to fret over further monetary tightening.
As largely a retail market, dominated by small individual investors, that would not only prove a body blow to already-bearish sentiment but potentially provoke anger among millions of citizens.
“A sub-3,000 index is the last thing the regulators want to see,” said Zhou Di, a retail investor who has spent 200,000 yuan (US$177,000) buying A-shares. “I believe they will sooner rather than later be forced to take action to buoy the market.”