China state-owned daily urges calm after market rout
SHANGHAI, July 28 (Reuters) – A Chinese state-owned securities newspaper urged calm on Wednesday after investors dumped mainland shares for a second day on worries over the impact of tighter government regulations.
Regulatory moves aimed at the education, property and technology sectors sparked heavy selling this week in Chinese markets, and have left global investors bruised and uncertain over the outlook for investments in Chinese firms. read more
In a front page commentary on Wednesday, the state-owned Securities Times said that 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.”
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 that 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.
What started off as a sell-off in shares on Monday had spread into fixed income and foreign exchange markets by Tuesday afternoon, sending the yuan falling through psychologically significant levels and pushing Chinese sovereign bond yields, and the cost of insurance against a default in China’s dollar debt, higher.Reporting by Andrew Galbraith; Editing by Ana Nicolaci da Costa
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