Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

China's efforts to calm investor jitters help markets rebound

Stock MarketsJul 29, 2021 06:18AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A Chinese national flag flutters outside the China Securities Regulatory Commission (CSRC) building on the Financial Street in Beijing, China July 9, 2021. REUTERS/Tingshu Wang

(Corrects pronoun for Wang to 'she', not 'he', in third-last paragraph)

HONG KONG/BEIJING (Reuters) - China stepped up attempts to calm frayed investor nerves after a wild markets rout this week by telling foreign brokerages not to "overinterpret" its latest regulatory actions, setting the stage for a rebound in beaten-down stocks on Thursday.

Chinese state media also joined in to say yuan-denominated assets in China remained attractive and that short-term market panic did not represent long-term value.

China stocks had their best day in two months on Thursday. The blue-chip CSI300 Index jumped 1.9% and the Shanghai Composite Index gained 1.5%, but for the week, the gauges are still down 4.7% and 3.9%, respectively.

Shenzhen's start-up board ChiNext jumped 5.3%, recouping nearly all of this week's savage losses.

Hong Kong's Hang Seng Index ended Thursday up 3.3%, shrinking this week's loss to 3.7%. The Hang Seng Tech Index, the target of a heavy sell-off earlier this week, surged 8%, but is still down 4.3% for the week.

The gains came after the securities regulator on Wednesday night held a meeting with executives of top global investment banks with an aim to calm financial markets nerves, people familiar with the matter told Reuters.

The meeting added to official efforts to shore up investor confidence, which has been dented by Beijing's sweeping regulatory actions that hit firms in the $120 billion private tutoring sector and technology behemoths.

"This is more to calm the market to isolate the education industry and not to overinterpret it," said one of the people, who has knowledge of the meeting held by China Securities Regulatory Commission (CSRC) vice chairman Fang Xinghai.

At the meeting, Fang told the bankers that official policies would be rolled out more steadily to avoid sharp volatility in the markets, said another person, adding Fang also indicated the crackdown was not aimed at decoupling Sino-U.S. financial markets.

Executives from investment banks Credit Suisse (SIX:CSGN), Goldman Sachs (NYSE:GS), JPMorgan (NYSE:JPM) and UBS, among others, attended the meeting, said the people, who declined to be named as they were not authorised to speak to the media.

The regulator only invited those foreign brokerages with existing licenses to operate in the country, said a separate person with knowledge of the meeting.

CSRC did not immediately respond to Reuters' request for comment. Representatives at Credit Suisse, Goldman, JPMorgan, and UBS declined to comment. Bloomberg first reported the regulatory meeting on Wednesday.

"Recent events definitely have a negative impact on the global investor sentiment about China. So the risk is whether the long-term money will also pull out of China," said Wang Qi, CEO at fund manager MegaTrust Investment (HK).

"In terms of the foreign capital flows, whatever happened lately was mostly driven by hedge fund type hot money ... we welcome any Chinese government's moves to increase transparency and rebuild investor confidence."

'REGULATORY RISKS'

The CSRC meeting followed a brutal sell-off in shares of Chinese companies this week after investors were spooked by Beijing's rules that ban for-profit tutoring in core school subjects.

The new rules for the private education companies closely followed China's antimonopoly campaign against technology giants and new regulations for home-grown companies looking to list overseas.

Qian Wang, Vanguard Group's Asia-Pacific chief economist, said that it's natural for global investors to be exposed to higher regulatory risks when it comes to investing in China.

"Although China is the world's second-biggest economy, it remains an emerging market with economic, policy and regulatory uncertainty," Wang said. If investors seek higher return, "you need to bear higher risks, which is natural", she said.

Beijing stepped up efforts to soothe investor nerves over the last couple of days amid concerns that a sharp sell-off in equities could have a spillover effect to other asset classes, including bonds and foreign exchange.

The state-backed China Daily said Beijing remained supportive of domestic companies seeking to list overseas and that regulators would soon unveil more measures to further open capital market to foreign entities.

(This story corrects pronoun for Wang to 'she', not 'he', in third-last paragraph)

China's efforts to calm investor jitters help markets rebound
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email