Beijing’s top regulators were in a hurry to regain market confidence as investors began to panic selling Chinese stocks for several days in a row, pushing major indices to their lowest levels in a few years.
Hong Kong’s Hang Seng Index has fallen about 22% since Friday, and Shanghai and Shenzhen stock prices have fallen 5% and 4% per day, respectively.
US-listed Chinese stocks weren’t any better. China Concepts Stock’s three-day loss totaled about $ 277 billion, the steepest since the 2008 financial crisis, with the NASDAQ Golden Dragon China Index down a cumulative 75% compared to its peak in February last year.
The administration’s Deputy Prime Minister Liu He chaired the Financial Stability Development Committee on March 16 in developing market-friendly policies and introducing measures that could adversely affect the market for government agencies. Asked to pay attention.
The People’s Bank of China, the central bank of China, also convened a meeting on the same day to convey support for SMEs. The talks also emphasized the importance of responding in a timely manner to “hot market trends” and “revitalizing self-confidence.” This reflects what Mr. Liu called at the cabinet meeting. The Bank of China Insurance Regulatory Commission and the China Securities Regulatory Commission also hosted separate meetings in response to Mr. Liu’s call.
“Short-term market volatility has not, and will not, change long-term sound growth,” read a summary of the securities regulators’ meeting.
Uncertainty about China’s COVID-19 blockade, growing international concerns about Beijing’s relations with Russia, and ongoing crackdowns on regulations both in the United States and domestically (more mainland companies will be delisted Official guarantees surged from US exchanges as Chinese stocks are struggling in (including risks).
However, Chinese scholars at the prestigious state academy have sought to account for the country’s market predicament to the United States.
The Ukrainian War has shaken the global stock market, but that alone cannot explain the sharp decline in Chinese stocks, especially those listed in the United States, said the Deputy Director of the Financial Banking Institute of the Chinese Academy of Social Sciences. One Zhang Ming writes in Science, Tuesday’s essay.
Zhang argued that institutional investors, especially those from the United States, “sell Chinese stocks throughout the market.”
“The conflict between Russia and Ukraine has made poor-selling Chinese stocks a’politically correct’choice for some Wall Street investors,” he said.
Last week, the Securities and Investment Commission identified for the first time that five Chinese companies, including KFC operator Yum China Holdings, could face delisting because they did not meet the auditing requirements under US law. This move has triggered a major sale of American Depositary Receipts (ADRs) by Chinese companies.
U.S. regulators have long sought full access to audit documents for U.S.-listed Chinese companies, but Beijing refused to provide such records because of state secrets. .. The 2020 Act, The Act on Responsibility of Foreign Companies, gives Chinese companies three years to allow US inspections before they face delisting.
Giving public guarantees to senior Chinese officials about the outlook for the Chinese stock market was one method Zhang proposed to calm an unstable inventor. His other advice includes discouraging foreign investors from withdrawing, such as relaxing regulatory measures and imposing taxes on financial transactions to curb abnormal capital flows.
Beijing hoped to reach its ambitious economic growth target of 5.5% this year, and its policy makers did not lose time to save investor confidence.
The stock market rebounded in response to the remarks. Major Chinese tech stocks such as Tencent Holdings and Alibaba Group surged 23% and 27%, respectively. Even stocks that suffered from China’s radical regulatory campaign last year responded positively. For example, the New Oriental Education and Technology Group rose 37%.
“These announcements don’t make much sense individually, but overall they suggest that policy makers will not be lazy,” said Stephen Innes of SPI Asset Management in a report.
Despite officials’ promise to support overseas listings, hostility to the United States appeared to remain persistent.
In a recent article widely posted by China’s state media, Zhang Yundong, a former director of the Shenzhen Market Supervision and Regulatory Bureau, said he would “take a unique path” to China’s finance and break “superstitions about the U.S. financial model.” I asked.
China has established a real-time monitoring system for foreign equities, stating that foreign hedge funds should be strategically restricted from entering the Chinese market, revealing deep distrust of foreign capital.