China’s financial regulators appear determined to tighten rules further, boost oversight
Jittery investors urged not to overreact to ‘mild deleveraging’ of marketplace, amid effort to bolster and prioritise financial security
China’s financial regulators are signalling that they will continue to tighten rules and slash leverage, regardless of the short-term pain their moves bring, keeping with President Xi Jinping’s order to prioritise financial security.
The Financial News, a publication under the People’s Bank of China (PBOC), said in a commentary on Monday that market participants should refrain from exaggerating small-market volatility, lest their actions disrupt regulators’ determination to enhance supervision amid a “mild deleveraging” of the marketplace.
“There’s no need to worry about the current monetary policy and regulatory policies,” the commentary said. “Stability remains the key tone.”
Investors, however, heavily sold off their holdings in China’s stock, bond and commodities futures markets in recent weeks, on the increased regulatory efforts and their increasingly hawkish tone.
The PBOC did not renew 230 billion yuan medium-term lending facilities mature last week, fueling concern that the era of easy money already has come to an end amid China’s deleveraging strategy and efforts aimed at preventing systemic risks.