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China put analysts, fund managers on notice as regulators start frowning on stock index forecasting
- China’s markets are dominated by small investors who are easily swayed by sentiment, Securities Times says, citing sources at financial-market regulators
- Guotai Junan, which predicted the Shanghai Composite would reach 4,000 points, is believed to have taken down the report from its WeChat account
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Zhang Shidongin Shanghai
In China, making calls on specific stock index levels could soon become a hazardous task for analysts and money managers. The practice might be the next focus of a crackdown by market regulators, according to state-run media.
Officials are now frowning on forecasts on specific levels of the nation’s benchmark stock indices, according to the Securities Times, a newspaper run by the Communist Party’s mouthpiece People’s Daily. The commentary cited unidentified sources at the nation’s financial-market watchdogs.
“The publication of research opinions should be objective, professional and prudent, and avoid being random,” the Times said. “The industry’s staff should stick to the bottom line of professional morality, given that China’s markets are dominated by small investors. They have poor judgment of various comments and are easily affected by sentiment.”
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The scrutiny on analysts’ recommendations underscores China’s determination to preserve its market stability at a time when the economy is emerging from more than a year of Covid-19 pandemic. The “warning” follows recent efforts to rein in commodity prices, temper the yuan’s appreciation and a clampdown on stock price manipulation, cryptocurrencies and anti-monopoly practices.
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China’s small investors reached 185 million at the end of April, double the 92 million members of the Communist Party. They contribute to about 70 per cent of stock transactions in the country and losses have sometimes stoked social tensions abhorred by top party leadership.
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