Date
22 November 2017
China’s key stock indices have climbed steadily since March 2016, while the country’s blue-chip benchmarks have performed better than the Dow Jones Industrial Average and S&P 500 this year. Photo: AFP
China’s key stock indices have climbed steadily since March 2016, while the country’s blue-chip benchmarks have performed better than the Dow Jones Industrial Average and S&P 500 this year. Photo: AFP

China market regulator lifts emergency measures

Chinese regulators declared victory over the country’s famously unruly stock markets, saying conditions are now calm enough that they have removed the emergency measures put in place to support equities following crashes in 2015 and 2016, the Wall Street Journal reports.

In an unusual statement posted to its website late Tuesday, the China Securities Regulatory Commission said that the country’s stock markets “have achieved smooth operation,” thanks to “a series of forceful measures to eliminate risks.”

China’s key stock indices have climbed steadily since March 2016, while the country’s blue-chip benchmarks have performed better than the Dow Jones Industrial Average and S&P 500 this year, the statement said. Market volatility has dropped sharply during the first seven months of 2017, while share valuations are moving toward a “reasonable” range, it said.

The calm has allowed regulators to phase out measures it had implemented to stabilize the markets after “the period of abnormal fluctuation,” the statement said.

The statement marks a turnaround from two summers ago, when Chinese stock markets—which had surged earlier in the year—lost as much as 43 percent of their value and the central bank rolled out a surprise devaluation of the yuan.

In the wake of the crash, Chinese authorities imposed a flurry of measures to support the market, including a six-month ban on share sales by major corporate shareholders; restrictions on short selling; infusions of state funds; and a temporary halt for initial public offerings. Securities regulators called many brokerages and funds directly, urging them to express publicly that they were bullish about stocks and refrain from selling shares.

Stocks recovered, then crashed again early last year, spurring regulators to roll out another round of support measures.

Those measures have nearly all been lifted, following an extended period of calm, steady stock appreciation that started in May 2016, after the appointment of a new securities czar, Liu Shiyu, in February.

Since March of last year, the benchmark indices in Shanghai and Shenzhen have gained 15.5 percent and 11.9 percent, the securities regulator said in its statement. For most of this year, Shanghai’s index hasn’t moved more than 1 percent up or down each day, it said.

In a signal of their newfound confidence, regulators in February eased restrictions on trading index futures that it had implemented in September 2015.

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