Economic policy makers including Vice Premier Liu He, who also weighed in on Friday, are now left walking a tightrope. To fortify the nation’s negotiating position on trade with the Trump administration, they need to stem the $3 trillion stock rout and support growth at home -- all without giving up on their goal of containing soaring debt levels.
"China is under pressure on multiple fronts," said Michael Every, head of Asia financial markets research at Rabobank in Hong Kong. "Logically, all this pushes China to make a deal, yet I don’t think there is a deal to be had."
While the Shanghai Composite opened lower on Friday morning after the officials’ statements, it rallied in the afternoon and closed with a 2.6 percent gain. Some investors speculated that China’s “National Team” of state-backed funds stepped in to add some oomph to policy makers’ verbal intervention.
China started jawboning the market higher today which is a welcome sign that the administration is beginning to pay attention to the rout in domestic shares. Talking the market higher is free so it is usually the first recourse officials resort to in their efforts to support markets. However, it will need to be followed by clear action to arrest the decline if negative investor sentiment is to be influenced.Click HERE to subscribe to Fuller Treacy Money Back to top