China Stocks Languish Despite Renewed Vow to Stabilize Markets
Chinese stocks fell, adding to last week’s rout, as investors assessed the latest pledge by policymakers to stabilize the slumping market.
(Bloomberg) -- Chinese stocks fell, adding to last week’s rout, as investors assessed the latest pledge by policymakers to stabilize the slumping market.
The Hang Seng China Enterprises Index fell as much as 1.5% before paring some of its loss. The CSI 300 Index also slipped following its worst week since 2022. Both indexes have trailed most major equity benchmarks around the world this year.
China pledged to stabilize markets after shares sank to a fresh five-year low in chaotic trading on Friday, but policymakers offered no specifics on how they plan to end a rout that is reaching epic proportions. The China Securities Regulatory Commission vowed on Sunday to prevent abnormal fluctuations, saying it would guide more medium- and long-term funds into the market and crack down on illegal activities including malicious short selling and insider trading.
“Last week’s panic selling in the mainland stock market once again highlighted that all the recent economic stimulus measures by the Chinese government and the central bank are incapable of alleviating the profound pessimism embedded in the investment market,” said Hebe Chen, analyst at IG Markets. “Considering this, the pledges from the CSRC, lacking any tangible measures for support, are unlikely to create any meaningful ripples in the market.”
Meanwhile, Liu Yuhui, an academic at a government think tank, was cited by a report as saying that the nation should set up a stocks stabilization fund as soon as possible to boost market confidence, with an aim to get its size to 10 trillion yuan ($1.4 trillion) or more.
Equities on the mainland capped their worst week in years on Friday, with the benchmark CSI 300 Index sliding 4.6%. The Shanghai Composite Index lost 6.2% in its biggest weekly drop since 2018.
“Whether or not today marks the floor to Chinese equities is yet to be seen but it sure feels as though we’re bumping along the bottom as policymakers have signaled they no longer want to see any further declines,” said David Chao, a strategist at Invesco Asset Management.
More stories like this are available on bloomberg.com
©2024 Bloomberg L.P.
