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Economy|Business and Economy
Chinese stocks pare losses as state media try to stem panic
The wobbly trade in Chinese markets came as state-owned securities newspaper urged calm on Wednesday and talked up markets.
Chinese state media tried to pacify jittery investors and said things 'will stabilise at any moment' [File: Qilai Shen/Bloomberg]
28 Jul 2021
Chinese shares fell on Wednesday but trimmed earlier losses amid volatile trade as state-run financial media called for calm following a wild rout triggered by investor concerns about tightening government regulation.
The Shanghai Composite Index fell as much as 2 percent before finishing the morning session down 0.59 percent. The blue-chip CSI300 index clawed back some of its losses to end the morning flat, but was still down more than 6.6 percent for the week.
In Hong Kong, the benchmark Hang Seng Index flitted between gains and losses to fall 0.24 percent at midday after plunging an eight-month closing low a day earlier. The Hang Seng China Enterprises Index was up 0.38 percent.
Andy Maynard, head of equities at China Renaissance in Hong Kong, said the market mood on Wednesday was “nervous” rather than panicked.
“Is the downside over? No, it’s not. Do we think there’s going to be more? Yes, there probably is. Do I think there’s some relief here? Yes.”
The Hang Seng Tech index, which hit record lows a day earlier, was barely lower. Real estate firms in Hong Kong rose 1.5 percent even as a mainland index tracking the sector fell 0.45 percent.
A CSI index tracking education firms listed on mainland and Hong Kong markets fell 0.52 percent.
Talking up markets
Chinese state media talked up the market after a wave of selling that had seen nearly $1.5 trillion of market value wiped off Hong Kong and mainland shares in the three trading days through Tuesday, according to Bloomberg-compiled data. Investors have dumped stocks in the crosshairs of Beijing’s sweeping regulatory crackdowns, with selling also spreading to bond and currency markets.
In a front-page commentary on Wednesday, the state-owned Securities Times said systemic risks “do not exist in the A-share market overall”.
“The macroeconomy is still in a steady rebound stage, and short-term fluctuations do not change the long-term positive outlook for A-shares,” the commentary said.
“The recent market decline to some extent reflects misinterpretation of policies and a venting of emotion. Economic fundamentals have not changed and the market will stabilise at any moment,” it said.
Other major securities dailies echoed the commentary in market reports.
In a front-page story citing domestic fund managers, the official China Securities Journal said the sell-off was a “structural adjustment”, a sustained plunge is unlikely and the market does not face systemic risk.
A story in the state-run Shanghai Securities News quoted domestic analysts as saying the sell-off would not continue, and that the market will gradually stabilise.
“For institutions, the decline brings the opportunity for positioning in high-quality shares,” it said.
Fixed income and foreign exchange markets were relatively steady on Wednesday after succumbing to Tuesday’s sell-off. The most-traded 10-year Chinese government bond futures, for September delivery, were last down 0.09 percent, following a 0.35 percent drop a day earlier.
China’s yuan firmed from a more than three-month trough against the dollar hit a day earlier, as some investors expected leading state banks could step in soon to support the currency. The yuan’s late slump fed into the People’s Bank of China’s weakest daily fixing in three months on Wednesday.
SOURCE: NEWS AGENCIES
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