SHANGHAI, Oct 19 — China’s top economic supremo today led a coordinated drive by top financial officials to shore up confidence in the country’s stock markets and economy, in a rare expression of concern over what one called “abnormal” share price falls.
The intervention Vice Premier Liu He and heads of the central bank and securities and banking regulators comes amid a bruising stock downturn and preceded the release of data showing a slowdown in economic growth.
Liu, who has overall control of economy policy, sought to ease worries about the effects of China’s increasingly bitter trade row with the United States, which has seen both sides exchange tariffs on hundreds of billions of dollars of goods.
He told state-run media that “the psychological impact is greater than the actual impact” and that China’s suddenly more-affordable shares were “creating good investment opportunities”.
Markets have tumbled on concerns over the economy, the China-US trade standoff and an official crackdown on excess debt leveraging in the financial system.
The losses have made China’s markets the world’s worst-performing in 2018, with the benchmark Shanghai Composite Index down around 30 per cent from a January peak and sitting at four-year lows.
Those remarks were joined by People’s Bank of China governor Yi Gang, who was quoted in Chinese media as saying: “Momentum for the economy to maintain steady growth has increased.
“Current stock market valuations are at historically low levels, which is in contrast with China’s stable and improving economic fundamentals.”
Friday’s comments represent the highest level effort to address concern over equities and the economy.
The officials sought to ease fears that China was swerving away from pledges of financial reform, and that private enterprises may suffer from a strengthening state hand on the economy, though they announced no major new reform initiatives.
The government said today the world’s second-largest economy expanded 6.5 per cent in July-September, the slowest quarterly pace in nine years.
The Shanghai and Shenzhen composite indexes fell early on Friday but quickly rebounded after the comments filtered out. Both closed 2.58 per cent higher for the day.
Zhang Gang, a strategist at Central China Securities, said investors had been awaiting a strong signal from the government but that more than mere words was needed.
“Although the rebound was large today, turnover remained low. The government needs to strike while the iron is hot and implement positive policies soon to fully restore confidence,” he said.
Banking regulator Guo Shuqing said Chinese financial market swings had been “abnormal” and “seriously out of line” with China’s economic fundamentals and the soundness of its financial system.
Donald Trump has embarked on a trade battle with China this year over what he considers predatory trade practices.
Trump, who often boasts of the US stock market’s gains during his presidency, has pointed to China’s equity troubles as a sign that Washington was winning the trade conflict.
Stock markets are major source of official Chinese concern following a 2015 stock meltdown that the government is widely blamed with worsening through policy miss-steps. — AFP
Source: The Malay Mail Online