China se­cu­ri­ties reg­u­la­tor says mar­ket forces to play big­ger role

The Pak Banker - - BUSINESS -

SHANG­HAI: China's se­cu­ri­ties reg­u­la­tor said that the gov­ern­ment will al­low mar­ket forces to play a big­ger role in de­ter­min­ing stock prices, the first of­fi­cial sig­nal from Bei­jing that it could be mod­er­at­ing its ef­forts to prop up its eq­uity mar­kets.

How­ever, the reg­u­la­tor also said that it would con­tinue to in­ter­vene as nec­es­sary to main­tain sta­bil­ity and avoid sys­temic risk. "With mar­ket fluc­tu­a­tions grad­u­ally shift­ing to nor­mal, from wild and ab­nor­mal, we should let the mar­ket ex­er­cise its func­tion of self-ad­just­ment," the China Se­cu­ri­ties Reg­u­la­tory Com­mis­sion told a news con­fer­ence in Bei­jing. How­ever, the watchdog said that China Se­cu­ri­ties Fi­nance Corp (CSF) - the state mar­gin len­der that was tasked with buy­ing shares dur­ing the mar­ket slump - would con­tinue to play its sta­bi­liz­ing role for the next few years. The com­ments are the clear­est sig­nal yet that the gov­ern­ment could be grad­u­ally end­ing its sup­port mea­sures for the eq­uity mar­ket and are likely to be in fo­cus when China's stock ex­changes open for trad­ing on Mon­day.

These mea­sures, which have in­cluded a ban on stake sales by ma­jor share­hold­ers and liq­uid­ity sup­port from the cen­tral bank, were aimed at stem­ming a mid-June mar­ket rout, but drew crit­i­cism over their blunt­ness. The CSRC did not say whether it would halt any spe­cific forms of in­ter­ven­tion. CSRC said on Fri­day that CSF has re­cently trans­ferred some shares it bought dur­ing the sell-off to Cen­tral Hui­jin, an in­vest­ment unit of sov­er­eign wealth fund China In­vest­ment Corp, and Hui­jin will be­come a long-term holder in those stocks.

"To­day, CSF trans­ferred some listed com­pa­nies' shares to Hui­jin. Hui­jin will strive to keep and in­crease the value of the as­sets, based on long-term in­vest­ment phi­los­o­phy," Hui­jin said in a state­ment on its web­site. When the mar­ket ex­pe­ri­ences ab­nor­mal fluc­tu­a­tions and threaten to cause sys­temic risks, CSF will con­tinue to help sta­bilise the mar­ket us­ing var­i­ous mea­sures, CSRC said.

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