Regulator should adopt bottom line thinking
Investors hope securities authorities can conduct effective rescue operations
Chinese securities regulator should make good use of bottom line thinking, which would manage various risk points in an orderly fashion while sticking to reform plans to prevent systemic financial risks, the China Securities Journal (CSJ) said in a front-page editorial on Monday.
Amid increasing external economic uncertainties, some emerging economies have encountered drastic fluctuations in their financial markets while domestic economic growth is facing more downward pressure, with all of these factors disturbing the normal operation of China’s A-share and foreign currency markets, according to the journal submission.
The Shanghai Composite Index closed up 1.11 percent at 2,698.47 points on Monday, but still below the psychological key 2,700 point level. Along with the A-share market slump, an increasing number of investors hope the authorities can launch rescue operations.
On Monday, the China Securities Regulatory Commission (CSRC) held a closed-door meeting with analysts from securities firms to seek their views on the A-share market, a separate CSJ report said. The regulator didn’t state its own views at the meeting.
From January to July, there was a net flow of 161.6 billion yuan ($23.6 billion) in foreign capital into the A-share market, with 49.8 billion yuan flowing in during June and July alone, data from the CSRC showed.
“At a time when foreign capital is scooping up A shares, most domestic investors are panicking and selling their stocks at low prices. I understand that but I want to remind investors to pay attention to market rules: It’s a good opportunity to buy in stocks when prices are at low levels,” said Yang Delong, chief economist at Shenzhen-based First Seafront Fund Management Co.
The Chinese capital market is not short of momentum to realize steady operation, the front-page CSJ editorial said, noting that domestic economic fundamentals remain unchanged.
In the meantime, regulators should step up efforts to supervise and actively tackle equity meltdown risks, debt defaults and other black swan events, according to the editorial.