China is encouraging long-term investors to buy more shares and major shareholders of listed companies to add to their holdings when shares fall, in a bid to stabilize a stock market. stocks shaken by worsening COVID-19 outbreak.
The government will also ease financing for companies in COVID-hit areas and urge state-owned shareholders of listed companies to actively buy undervalued shares, the country’s securities watchdog said in a statement posted on its website. website late Monday.
China’s benchmark CSI300 index fell 3.1% on Monday, the biggest drop in a month, as lockdowns in Shanghai and other parts of the country threaten economic growth.
On Tuesday morning, the market sank further to hit a nearly four-week low, taking this year’s losses to 17%, as investors seemed unfazed by the authorities’ move.
Yuan Yuwei, a hedge fund manager at Water Wisdom Asset Management, said moving capital, especially public money, into the Chinese stock market now makes no sense.
“There are still a lot of bubbles and structural risks in this market, which is also facing huge external uncertainty,” he said, citing the risk of capital outflows, the fallout from the Ukraine crisis and heightened geopolitical tensions.
The China Securities Market Regulatory Commission (CSRC) said in its Monday statement that the authorities will take measures to stabilize the expectations of listed companies and investors.
China will encourage social security funds, pension funds, insurers, trust companies and wealth management companies to allocate more money to equity assets, and invest more in quality listed companies, added the CSRC.
The government will also improve the financing mechanism for private companies and support fundraising, acquisitions and restructuring of companies in areas highly affected by COVID.
To boost investor confidence, the CSRC said it will encourage listed companies to buy back their shares to stabilize prices. Major shareholders and senior executives are also encouraged to actively buy shares when prices fall sharply.
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