Chinese state newspaper seeks to talk up beleaguered stock market, citing buy-backs, improving economy
- Investors should be optimistic, as multiple signs emerge that bode well for equities, the Securities Daily said in an opinion piece
- ‘Investors should not care too much about the index level, and be confident in looking forward from a longer perspective,’ said the editorial
The newspaper, which is one of the four authorised publications for listed companies’ filings, is owned by the Economic Daily Press Group that is ultimately controlled the Communist Party’s propaganda department.
The opinion piece came as fears of a sizeable interest-rate increase by the Federal Reserve later this week grip global markets. The Fed will probably lift the borrowing cost by at least 75 basis points when its open-market committee meets on Thursday local time.
China’s CSI 300 Index edged up 0.1 per cent on Tuesday, snapping a streak of four daily declines. Still, the gauge remains down 13 per cent from a high on July 4.
The Securities Daily commentary cited the acceleration in economic data in August, stock buy-back plans of 102 publicly traded companies this quarter and the price-to-earnings ratio of about 11 times for the biggest onshore stocks as the tailwinds that will drive up share prices.
The US investment bank expects Chinese stocks to remain sluggish before the political event, because of the government’s strict zero-Covid policy and the housing market crisis.
Some of China’s biggest investment banks are on side with the state media. China International Capital Corp said shrinking trading volumes were probably a sign of receding selling pressure and liquidity was still sufficient to support stocks.
The combined turnover on the Shanghai and Shenzhen exchanges dropped to 633.9 billion yuan on Tuesday, a level not seen since April 2021 and about a third below the daily average this year, according to Bloomberg data.
“Investors should not care too much about the index level, and be confident in looking forward from a longer perspective,” said the Securities Daily editorial.