Official remarks, policies aim to revive economy, instill optimism

▶ Chinese equities nosedive amid surge in epidemic

As China's equity and foreign exchange markets undergo big swings amid multifaceted uncertainties, a flood of official remarks, policy recommendations and actions have been made or taken, as part of the government's bid to instill optimism for the world's second- largest economy and the capital market.

The announcements spanning investment, consumption, and monetary policies are supposed to create a buffer against downward pressures on the economy, market observers said.

The country still has leeway to restore investor confidence, they noted, expecting more moves in the pipeline to steady the yuan, which alongside the progress on virus containment in some of the nation's largest cities would be key to driving a market turnaround.

A meeting of the Central Committee for Financial and Economic Affairs on Tuesday called for market expectations to be well guided and policy orientations and principles to be clarified, so as to stabilize market confidence.

Shortly prior to the market opening on Tuesday, the People's Bank of China ( PBC), the central bank, posted a short statement on its website, reassuring the market of the economy's sound fundamentals, the huge potential of the economy's organic growth.

“We've taken note of some fluctuations in the financial market recently, mainly affected by investors' expectations and sentiment,” read the note.

The Shanghai Composite Index plunged 5.13 percent on Monday before shedding another 1.44 percent on Tuesday. The benchmark finished below 2,900 points on Tuesday after failing to hold above the key support level of 3,000 points.

Not long after Tuesday's market close, the Shanghai Securities Association, the Shanghai Futures Association, and the Shanghai Asset Management Association jointly released a notice that called on market participants to steadfastly maintain market stability.

The financial system has endorsed a two- pronged push for virus containment and economic development, with support for smooth logistics and industrial and supply chain stability to minimize the impact of the epidemic on the economy and society, the PBC said.

The central bank vowed to ramp up monetary policy support for the real economy, with the rollout of relending tailored for innovations and social welfare, as well as an additional 100 billion yuan ($ 15.28 billion) of relending for coal exploration and new energy.

The PBC's fresh remarks came on the heels of its announcement on Monday to cut forex reserve requirements for financial institutions by 1 percentage points to 8 percent amid the yuan's accelerated depreciation.

The first- of- its- kind cut, effective on May 15, followed five previous hikes when the yuan was under pressure to appreciate, media reports said.