• Securities regulator phones investment banks to ease concerns
• China Daily: Markets will be opened further & firms can still list abroad
Beijing scrambled to calm investors after a crackdown on some of China’s biggest firms rattled markets with regulators calling bankers in for a last-minute call on Wednesday night.
The call hosted by the China Securities Regulatory Commission included executives of international investment banks, AFP reported, citing Bloomberg.
The business models of private tutoring firms were obliterated by a shock announcement on Saturday that they must become non-profits, sending stock prices crashing.
Bankers were given the impression that the sudden edicts for education companies were not going to affect other industries, it said.
State media said on Thursday that yuan-denominated assets remain attractive and that short-term market panic does not represent long-term value, the latest official effort to shore up investor confidence, Reuters reported.
The verbal support for markets came as brutal sell-offs in Chinese shares prompted worries about a spillover effect to other asset classes, including bonds and foreign exchange.
“In general, investment institutions generally believe that the current market correction is still a short-term event shock, rather than a reversal caused by changes in fundamentals,” the China Securities Journal said in a front-page commentary.
“The broad investment trend in favour of yuan-denominated assets will not be reversed.”
Many local media outlets republished a commentary on Wednesday night from the official Xinhua news agency that declared “the foundation for China’s capital market development is still solid”.
The recent new rules are “not restrictions and suppression targeting the relevant industries”, the commentary said, arguing that the policies are instead aimed at “preventing disorderly capital expansion” and strengthening anti-trust measures.
Meanwhile, the state-backed China Daily cited unnamed sources as saying China remained supportive of domestic companies seeking to list overseas and that regulators would soon unveil more measures to further open capital markets to foreign entities.
Regulatory moves aimed at the education, property and technology sectors sparked heavy selling earlier this week – an outflow of $2.6 billion – from Chinese markets, and have left global investors bruised and uncertain over the outlook for investment in Chinese firms.
Officials’ public reassurances appeared to have the desired effect. China and Hong Kong stocks rebounded sharply in early trade on Thursday, with both the blue-chip CSI 300 index and Shanghai Composite Index jumping more than 1%.
Reporting by AFP and Reuters