(Bloomberg) — A move by Chinese state media to reassure investors shocked by Beijing’s regulatory actions had mixed effects Wednesday as the benchmark stock index fluctuated after a three-day sell-off.
The CSI 300 Index was up 0.2% at 2:23 PM in Shanghai, after going back and forth between gains and losses about a dozen times. The Hang Seng index fell as much as 1% – dropping from its recent February 17 peak to 20% and setting it on course for a bear market – before all those losses were reversed.
Chinese state media talked about the market after a wave of sales wiped out nearly $1.5 trillion in market value in Hong Kong and the mainland’s three trading days through Tuesday, according to data compiled by Bloomberg. Investors have dumped stocks in the face of Beijing’s sweeping regulatory crackdown, with sales also spreading to bond and currency markets.
“China’s ‘national team’ may be gearing up to ‘stabilize’ markets,” Jeffrey Halley, senior market analyst at Oanda Asia Pacific Pte., wrote in a note. “However, it is doubtful whether the price revision of Chinese equities to the government’s regulatory risk has run its course.”
Meituan, which had seen its stock rise amid China’s new regulations on the food delivery sector, rose 8%. Tencent Holdings Ltd. fell 0.4%, extending Tuesday’s 9% decline. The Hang Seng Tech Index rose 2.7%.
READ: Tencent Among Cos. ordered by China to fix mobile app issues problemen
The recent declines are unsustainable and the market will soon stabilize, the Securities Daily reported, citing fund managers. The slump has “reflected to some extent the misreading of policy and venting sentiment by some funds,” the Securities Times wrote in a front-page editorial, adding that economic fundamentals are unchanged and the market is moving forward. can stabilize at any time.
The jaw blow follows dramatic market moves that underlined the fragility of investor confidence amid a months-long regulatory attack by Beijing. Traders fear the latest crackdown on the country’s education, technology and real estate sectors could spread to other industries like healthcare as China looks to tighten its grip on Big Tech and narrow the wealth gap. The government has targeted private companies it blames for exacerbating inequality and increasing financial risk.
Elsewhere, the China Securities Journal echoed other publications saying there was no systemic risk, and quoted domestic mutual funds and private fund managers as saying investors shouldn’t be overly pessimistic. The Shanghai Securities News also ran a piece quoting analysts that the decline has provided buying opportunities in quality stocks.
“While policy adjustment in some industries may affect their current business model, it will be beneficial in unleashing greater social vitality in the medium to long term and promoting consumption in most other areas,” the Securities Times said. that the general valuations in A shares are reasonable.
“There has been more panic in some sectors than others in recent days, and the most important thing is to keep the emotions in check,” said Du Kejun, fund manager at Beijing Gelei Asset Management Center LP, adding that he would consider investing in EV companies and chip makers if the dip continues.
More stories like this are available on bloomberg.com
Subscribe now to stay ahead of the game with the most trusted business news source.
©2020 Bloomberg LP