China’s Market Regulator Aims to Halt Stock Decline
The ongoing decline of A-shares in the Chinese stock market has prompted the country’s market regulator to take action. According to reports, China’s market regulator has instructed some institutional investors not to sell stocks listed in Shanghai and Shenzhen in an attempt to reverse the recent decline of A-shares.
Market participants told the Financial Times that regulatory authorities have provided “window guidance” to some institutional investors, urging them not to net sell stocks on certain days. These measures come as China’s benchmark CSI 300 index has fallen 4% so far this year and 20% over the past 52 weeks, prompting concern among investors and regulators alike.
The China Securities Regulatory Commission, Shanghai Stock Exchange and Shenzhen Stock Exchange introduced similar selling restrictions in October last year after pressure from the central government, leading to a 3% increase in the CSI 300 Index at the time. However, the new year has brought with it a relaxation of these measures for some small funds, resulting in a sell-off in the Chinese market and exacerbating the decline of the CSI 300 Index at the beginning of the year. Reports indicate that regulators have reintroduced these restrictions in an effort to stem recent declines.
This latest development comes as investors eagerly await the release of China’s annual economic data on Wednesday. The data is expected to show that China has achieved its 2023 economic growth target. According to 58 economists surveyed by Reuters, China’s National Bureau of Statistics data will show China’s GDP growth of 5.2% in 2023, surpassing the 5% growth target set by the Chinese government.
However, a Reuters survey also indicates that China’s economic growth is expected to slow to 4.6% in 2024 and 4.5% in 2025, which will increase the pressure on the Chinese government to introduce new stimulus measures to boost the economy.
As the Chinese government strives to stabilize the stock market and the economy, the impact of these measures on market stability and investor confidence remains to be seen.