CSRC says state meddling stabilises China stock market

Investors speculate that regular state intervention has continued even after the 2015 market rout that wiped off US$5 trillion in market value was over, with the most recent prominent case in January this year

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China’s securities regulator says intervention has stabilised China stock markets, referring to occasions when Beijing directed state funds to shore up a tanking market; retail investors described them as authorities turning on the tap. Photo: Shutterstock

Published: 5:02pm, 16 Aug 2017Updated: 10:45pm, 16 Aug 2017

State intervention has successfully stabilised China’s US$7 trillion stock market by curbing volatility and steering valuations to rational levels, according to the nation’s securities regulator.

In a rare move to comment on the market performance, the China Securities Regulatory Commission said in a statement on its website on Tuesday that the gauges tracking the nation’s big-cap blue-chip stocks beat the world’s other major benchmarks such as the Dow Jones Industrial Average and UK’s FTSE 100 Index in the first seven months of the year. In spite of the outperformance, the valuations were still lower than the global peers, it said.

Within the 140 trading days in the period, the benchmark Shanghai Composite Index had not closed up or down by more than 2 per cent and registered only eight days with daily movement exceeding 1 per cent, the CSRC said in the statement.

The regulator mainly attributed the tame market performance to state-linked funds, which were created during the equity crash in 2015 to shore up stocks, and said maintaining market stability was the pre-condition for carrying out reforms.

“The CSRC has put the prevention against financial risks at a more important position and taken a series of strong measures to rid any potential risks in collaboration with relevant departments,’’ the regulator said in the statement.

In what could be seen as a pat on the back, the CSRC says it has stabilised China’s stock market by curbing volatility and steering valuations to rational levels, with the gauges tracking big-cap blue-chip stocks having beat the world’s other major benchmarks. Photo: Reuters

Even after the market rout that almost erased US$5 trillion in market value in 2015 was over, the state funds, or dubbed by investors as the national team, are suspected of frequently meddling in the market. The most prominent case this year was January 16, when the Shanghai

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