chinese securities regulator strikes an ambiguous note on market intervention 1919152015
The CSRC’s latest pronouncements on its role in the stock market
The Chinese Securities Regulatory Commission (CSRC) said Friday at a news conference that it would henceforth allow market forces a freer hand in determining the direction of Chinese stock markets, though it would keep unchanged its role as an invigilator to guard against systemic risk and instability.
"With market fluctuations gradually shifting to normal, from wild and abnormal, we should let the market exercise its function of self-adjustment," the China Securities Regulatory Commission told a news conference in Beijing, according to a Reuters report.
Supporters of free markets, who have strongly criticised Beijing’s intervention in the country’s stock market collapse, may not have much to rejoice about, however – because what the CSRC gave with one hand, it took away with the other.
For, the same day, the CSRC also said in a post on its official Weibo micro-blogging page that the China Securities Finance Corp. (CSFC) would continue to support the stock markets for some time to come.
"For a number of years to come, the China Securities Finance Corp. will not exit (the market),” the CSRC said in the blog. “Its function to stabilize the market will not change,"
The CSFC, the state-owned financial vehicle that provides margin money financing to the stock markets, was the central player in the Chinese government’s intervention to prop up stock markets after a shock collapse commenced mid-June. The CSFC eased margin money financing norms and used funds provided by state-owned banks to buy stocks in a big way, deterring short sellers.
That the CSFC is in for the long haul also became clear in another CSRC statement Friday which revealed that certain shares, which CSFC bought during its market stabilisation role in the meltdown, had been transferred to Central Huijin, an investment unit of sovereign wealth fund China Investment Corp.
"Today, CSF transferred some listed companies' shares to Huijin,” Central Huijin said in a statement on its website. “Huijin will strive to keep and increase the value of the assets, based on long-term investment philosophy."
It is interesting that the CSF has been able to palm off its shares to Hujin. In other measures designed to support the markets, the regulator barred ‘big’ investors from off-loading their stakes on the market, and a ban on short selling meant that these investors also could not hedge their holdings.
