No efforts spared for market stability

By Wang Yanlin  |   2008-6-24  |     NEWSPAPER EDITION

CHINA will spare no efforts to facilitate the stable growth of the country's capital market and further strengthen market supervision, said Shang Fulin, chairman of the China Securities Regulatory Commission.

"China will work to create a reasonable balance between supply and demand in the stock market. Under the current circumstances, we have to keep a clear mind about the market trends, which are usually moving upward among corrections," Shang said during an internal meeting on Sunday.

Shang said the regulator will take legal action to punish those who spread false information or rumors which disturbs the market order and damages the market's performance.

The regulator will also publish on a regular basis information about previously locked-up shares, encouraging and directing long-term capital into the stock markets.

The regulator will also improve coordination with the public security and judicial departments to effect punishment for those trying to manipulate the markets, giving out false information or embezzling.

China's two bourses have plunged severely since the second half of last year. The benchmark Shanghai Composite Index has fallen more than 50 percent to around 2,800 points this month since October last year when it reached a record high of 6,124 points.

Losing stretch

The CSI 300 Index, which tracks the 300 biggest listed firms in Shanghai and Shenzhen, has dropped 48 percent this year and touched a record losing stretch this month with a decline of 22 percent in 10 days.

China became the second worst performer in Asia this year despite the regulator beefing up efforts to bolster the stock markets, including the reduction in stamp duty in April and the introduction of an off-market block trading system to make the trading of shares after their lock-up period more transparent.

Last week Shang said an "excessive or too rapid" openness toward foreign participation would create potential financial risks.

He urged a comprehensive analysis of current policies and practices for foreign participation, as well as analyzing the influence of the subprime crisis and Vietnam's financial woes on China's market.