Home > News > Daily News > Beijing pays high price for intervention
News
Daily News
Industry News
Company news
Certifications
Latest News

Gifts of love in ancient China

Jade pendants The ancient Chinese usually gave their lovers something small so that they could easily take it everywhere. A jade pendant is a good cho...

what is mild steel

Mild steel is a type of carbon steel with a low amount of carbon – it is actually also known as “low carbon steel.” Although ranges vary depending ...

10 Differences between a Businessman and Entrepreneur

10 Differences between a Businessman and Entrepreneur Business people and entrepreneurs have many similarities.However, they are not the same kind of ...

What is ALOCROM 1200 surface treatment

What is ALOCROM 1200surface treatment Alocrom 1200 is a rapidnon-electrolytic dip process which gives excellent protection against corrosionto both pa...

What is Kydex material

What is Kydexmaterial Kydex is a line of thermoplasticacrylic-polyvinyl chloride materials manufactured by Sekisui SPI. It has a widevariety of applic...

What is Over mold?

Overmolding is also called 2 times injection molding in China. Compared with the third-party material bonding, overmolding process makes the process f...

What is Alodine 5200 surface treatment

What is Alodine 5200surface treatment Alodine 5200 treatment is a chromiumfree product and specifically formulated for treating aluminium and its allo...

What is Black Oxide?

Black Oxide, blackening, oxidizing, oxiding, black passivating, gun bluing . . . these terms all refer to the process of forming a black iron oxide on...

Privacy Policy

We will not collect and store your information in any form.

How and When to Add Bend Reliefs to Sheet Metal Parts

What is a Bend Relief? A bend relief is nothing more than two small incisions cut into a piece of sheet metal to free the metal between the two. It se...
Contact Us
Vice General Manager: Ivy
Tel:86-13312953695
Tel:86-755-82737317/82737469
Fax:86-755-82737710
E-mail: sales910@xy-global.com, sales.china@xy-global.com
Postal Code: 518129
Off Add: Room1702,17F,Building#4,Tianan Cloud Park,No.2018 Xuegang Rd.,Longgang District,Shenzhen.
Factory Add:Daling Industrial Area,Shaling,Fenggang Town,Dongguan City Contact Now

Beijing pays high price for intervention

Beijing pays high price for intervention

naky www.diecastingpartsupplier.com 2015-09-16 15:26:11
Aggressive policy action is now a regular feature of global markets — Haruhiko Kuroda had his bazooka, while Ben Bernanke took to a helicopter.

But in China, falling asset prices have met a full-scale invasion of the market, securing an expensive victory that many believe could yet prove fleeting.

After three months of huge government intervention to halt diving stocks, Chinese authorities appear ready to declare their mission accomplished. Zhou Xiaochuan, governor of the People’s Bank of China, told a G20 meeting last weekend that the stock market correction, which has left the Shanghai Composite nearly 40 per cent below its June high, is now “mostly over”.

In the days since, the Shanghai Composite has barely budged, rising 1.2 per cent this week. Having tumbled from a peak of 5,100 points in mid-June, the index seems to have found a new comfort zone just above 3,000 points, where it has been trading since the last week of August.

Not everyone is convinced, however. Average equity valuations may have come down significantly from the peak, but many stocks — especially small-caps — still trade at price to earnings ratios far above their historical trend. Despite the huge falls in the Shanghai and Shenzhen indices, both have risen a third over the past 12 months, making them the best performing markets in the world. The bubble, say sceptics, has not yet completely burst.

“The government is supporting the market at too high a level”, says Francis Cheung, China equity strategist at CLSA. “They are going to lose. At some point, they will have to let go.” He has a price target for the Shanghai Composite of 2,700, implying a further 15 per cent drop from current levels.

The costs of rescuing the market have not just been financial. The intervention has derailed some key reform initiatives, such as shifting capital raising from commercial bank loans to the equity market. To cut the supply of new shares into the market, initial public offerings have been frozen.

Trading volumes have collapsed as government action, capital outflows and ructions in the currency markets have sapped liquidity. Turnover on the Shanghai stock exchange on Tuesday fell to $43bn, the lowest daily amount since February and down from a peak of $212bn in early June. Futures volumes have taken a more severe hammering.

Meanwhile, the longer term goal of increasing foreign participation in domestic financial markets has taken a significant step backwards after new rules were introduced that banned short selling and big share sales.

“Nobody wants to own an asset without knowing if they can sell,” says Bob Browne, chief investment officer at Northern Trust, the US fund manager with $960bn in assets under management.