China has blinked and rushed to reassure investors – local and foreign – that it is not looking to damage market confidence.
Media reports say China’s securities regulator convened executives of major investment banks on Wednesday night, attempting to ease market fears about Beijing’s crackdown on private education – specifically after-school tutoring.
The crackdown saw Chinese and Hong Kong stockmarkets tumble sharply on Monday and Tuesday, but slow on Wednesday as news of the impending meeting percolated through the markets in the afternoon.
Chinese shares did fall again on Wednesday morning but trimmed earlier losses amid volatile trade as state-run financial media called for calm following a sell-off triggered by investor concerns about tightening government regulation.
A state-owned securities newspaper urged calm for A-share investors on Wednesday. The Securities Times wrote the market “will stabilise at any moment” after regulatory moves aimed at the education, property and technology sectors sparked heavy selling early in the week.
The Wall Street Journal and Bloomberg both reported that in a Wednesday evening meeting, China’s top securities regulator told global financial institutions that Beijing will consider the impact on markets when it introduces new policies in the future.
The rushed briefing helped – the CSI 300 index (covering China’s 300 top listed companies on the Shanghai and Shenzhen exchanges) jumped 2% in early trading on Thursday after losing group for a wee, though that had been trimmed to a 1.89% gain.
The Shanghai market was up 1.42% at one stage, but eased to close 1.3% higher. The Hang Seng Index in Hong Kong bounced back with a 3% rise later trimmed to a 2.79% gain after shedding more than 8% on Monday and Tuesday.
Upwards of $US2 billion in foreign funds were sent out of Chinese markets on Monday, Tuesday and Wednesday, according to some western brokers.
Reuters reported that US exchange traded firm ARK Invest, headed by celebrity fund manager Cathie Wood, said it had dumped shares of Alibaba, Baidu, Tencent, KE Holdings and Byd.
The firm has also begun cutting stakes in JD.com and game-streaming company Huya since Beijing launched a crackdown on ride-hailing company Didi Global several weeks ago (for raising money in the US with a securities issue in apparent defiance of what the Communist Party run government wanted the company to do).
One of the areas that saw heavy selling was in Chinese health stocks where Reuters and other media report big sales by foreigners concerned it would be next after the attacks on after hours education, ride hailing and food delivery, online music (Ten Cent), and the huge Alibaba and its plans to list its finance arm.
As well there has been the tightening of the Communist Party’s control of Hong Kong and what that means for free speech about the economy and mainland and local regulations, regulators and policies.
