China seeks to calm jittery stock markets
BEIJING—China’s securities watchdog has called for calm in the country’s stock markets, attributing recent declines partly to “panic” selling, state media reported Wednesday.
The People’s Daily newspaper, citing an official with the China Securities Regulatory Commission (CSRC), said markets had been battered by expectations of falling corporate earnings as growth slowed.
“However, the reaction was overdone,” said the official, who was not named. “The A-share market had panic-led declines dominated by pessimism.”
The benchmark Shanghai Composite Index and the Shenzhen Component Index, which show general price trends, have declined by 11.3 percent and 12.06 percent, respectively, since June, said the ruling Communist Party’s mouthpiece.
The Shanghai index on Wednesday closed up 0.94 percent to 2,123.36, recovering from a drop the day before that took it to its lowest level since March 2009.
New draft rules on stock delisting released last week have also had a negative effect, the official said.
The rules would make it easier to remove stocks from the market by expanding delisting conditions and tightening requirements for suspended shares to resume trading, media reports have said.
The CSRC official said the dividend-price ratio, a key gauge of the value of a stock, in the Chinese markets has been rising steadily in the past three years and in 2011 was even higher than some developed markets, the People’s Daily said.
The new delisting rules will help markets develop in a healthy way in the long run even though their impact will take time to kick in, the official added.
“(We) must firmly believe that the long-term fundamentals of China’s stock markets have not changed and we have no reason to question the growth prospects of the capital markets,” the official was quoted as saying.
The world’s second-largest economy grew by 7.6 percent on year in the second quarter, the slowest in three years, and China’s top leaders have vowed to make boosting growth a top priority.
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