Beijing meets banks to calm frayed nerves after three-day stock market rout wiped out US$800 billion in value

A call that was attended by several major international banks, was led by CSRC Vice-Chairman Fang Xinghai

Outreach shows there is no intention to destroy business models and businesses that are aligned with party’s priorities for China: analysts

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Chinese stock index futures extended gains in late Hong Kong trading after reports of the CSRC meeting. Photo: EPA-EFE

Published: 9:37am, 29 Jul 2021Updated: 10:10am, 29 Jul 2021

China’s securities regulator convened executives of major investment banks on Wednesday night, in an attempt to ease market fears about Beijing’s crackdown on the private education industry.

The hastily arranged call, which included attendees from several major international banks, was led by the China Securities Regulatory Commission (CSRC) vice-chairman, Fang Xinghai, people familiar with the matter said, asking not to be named as they were discussing private information. Some bankers left with the message that the education policies were targeted and not intended to hurt companies in other industries, the people said.

It is the latest sign that Chinese authorities have become uncomfortable with a sell-off that sent the country’s key stock indexes to the brink of a bear market on Wednesday morning. State-run media has published a series of articles suggesting that the rout was overdone, while some analysts have speculated government linked funds have begun intervening to prop up the market.

China’s official Xinhua News Agency said in an article late on Wednesday that recent policies targeting internet platforms and after-school tutoring were aimed at protecting online data security and social welfare rather than outright curtailing these industries. The securities regulator had an “open attitude” toward companies’ listing venues, Xinhua said.

“What this shows is that there isn’t an intention to unilaterally destroy business models and businesses which are fundamentally aligned to the party’s priorities for China’s development,” said Adam Montanaro, a London-based emerging-market fund manager at Aberdeen Standard Investments.

The step gives reassurance that the tutoring industry decision was a unique case and “should slowly begin to restore confidence if they can convince the market that the regulatory developments are not an attack on profitable enterprises”, he added.