Xi Spurs Frantic Stock Buying With Lifeline for China Market
Comment of the Day

March 16 2022

Commentary by Eoin Treacy

Xi Spurs Frantic Stock Buying With Lifeline for China Market

This article from Bloomberg may be of interest to subscribers. Here is a section:

In a brief statement carried by state media, China’s top financial policy body vowed to ensure stability in capital markets, support overseas stock listings, resolve risks around property developers and complete the crackdown on Big Tech “as soon as possible.” Yi Gang, governor of the People’s Bank of China, followed with a statement saying the central bank would help implement the policies, as did the banking watchdog.

While the pledges from President Xi Jinping’s government offered little clarity over what authorities may do to achieve their goals, it was the first time China publicly addressed investors’ top concerns in one coordinated swoop. The move underscored Xi’s focus on ensuring economic and financial stability before a Communist Party congress at which he’s expected to secure at least another five years in power.

By the time trading ended just after 4 p.m. local time on Wednesday, the Hang Seng China Enterprises Index was up 12.5% in its best session since October 2008. Alibaba Group Holding Ltd. surged 27%, while JD.com Inc. jumped 36%. Property stocks rallied the most in more than a decade.

Eoin Treacy's view

Investors have been fearful of buying Chinese securities because of uncertainty about the commitment of the government to do what is necessary to protect the economy. Now they have an answer, government officials do not like volatility and China’s stock markets have been falling in a very panicky manner. 

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