China made a strong push to stabilize battered financial markets, promising to ease a regulatory crackdown, support property and technology companies and stimulate the economy.
The government should “actively introduce policies that benefit markets,” according to a meeting of China’s top financial policy committee led by Vice Premier Liu He, the country’s top economic official. That vow to take investors interests into account comes after a sell-off in domestic shares due to fears over growth risks and tough regulation of real estate and internet companies.
The meeting offered investors re-assurance that a sweeping crackdown on internet companies was nearing its end and that the government would prevent a disorderly collapse in the property market. China’s banking regulator said after the meeting that it would support insurance companies to increase investment in stock markets.
Stocks surged after the announcements. The Hang Seng China Enterprises Index jumped 13% at the close in Hong Kong, the most since 2008, recouping nearly half of this year’s losses. The CSI 300 Index of mainland shares climbed 4.3%.
“The statement addressed so many issues on various fronts, which is really rare,” said Ding Shuang, chief economist for Greater China and North Asia at Standard Chartered Plc. “Selloffs tended to be self-fulfilling partly because of the lack of response from the government,” and one aim of the government is probably to break that inertia and stabilize market expectations, he said.
The statement signals an adjustment after months in which Chinese capital markets were battered by government policies ranging from a squeeze on financing for property developers to a sweeping regulatory campaign aimed at internet giants like Alibaba Group Holding and Tencent Holdings. The sell-off deepened in recent days, as rising energy prices caused by Russia’s invasion of Ukraine and a surge in Chinese coronavirus cases called into question Beijing’s ability to meet its economic growth target.
