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China steps up efforts to calm investor nervousness; Markets recover

HONG KONG / BEJING, Jul 29 (Reuters) – China stepped up its efforts to calm the nerves of frayed investors after a frenzied market flight this week by telling foreign brokers not to “over-interpret” its recent regulatory measures, setting the stage for a rebound in the less stocks hit on Thursday.

Chinese state media also joined in, saying that yuan-denominated assets in the country remained attractive and that the short-term market panic did not represent long-term value.

Around noon, China’s blue-chip index CSI300 (.CSI300) rose 1.4% but still lost over 5% this week. The Shanghai Composite Index (.SSEC) rose 1% and reduced the weekly loss to 4.3%.

Shenzhen start-up board ChiNext (.CHINEXT) rose 4.1%, making up for much of the week’s massive losses.

In Hong Kong, the Hang Seng Index (.HSI) rose 2.7% and the Hang Seng Tech Index (.HSCI), the target of strong sales earlier in the week, rose 6.8% but is still for the week down by 5.3% 3%.

The gains came after the securities regulator held a meeting with executives from the world’s leading investment banks on Wednesday evening to calm the nerves of the financial markets, people familiar with the matter told Reuters.

The meeting added to official efforts to build investor confidence, which has been marred by Beijing’s sweeping regulatory measures that have hit companies in the $ 120 billion private tuition sector and tech giants.

“This is more to calm the market down, to isolate the education industry and not to over-interpret it,” said one of the people familiar with the meeting of the China Securities Regulatory Commission (CSRC) vice chairman Fang Xinghai.

At the meeting, Fang told bankers that official guidelines would be implemented more consistently in the country to avoid high volatility in global markets, another person said.

The meeting was attended by executives from the investment banks Credit Suisse (CSGN.S), Goldman Sachs (GS.N), JPMorgan (JPM.N) and UBS (UBSG.S) because they were not allowed to speak to the media .

The regulator only invited those foreign brokerage firms with existing licenses to operate in the country, said a separate person with knowledge of the meeting.

CSRC and Credit Suisse did not immediately respond to Reuters’ request for comment. Goldman, JPMorgan and UBS representatives declined to comment. Bloomberg reported on the development for the first time on Wednesday.

The meeting followed a brutal sell-off of shares in Chinese companies this week after investors were terrified by Beijing’s rules prohibiting for-profit tutoring in core school subjects. Continue reading

The new rules for private education companies followed China’s antimonopoly campaign against technology giants and new regulations for domestic companies seeking listing abroad.

However, Beijing has stepped up its efforts in recent days to calm investor nerves amid fears that a sharp sell-off in stocks could spill over other asset classes such as bonds and forex.

The state-backed China Daily said Beijing continues to support domestic companies seeking listing abroad and regulators would soon announce further measures to further open the capital market to foreign companies. Continue reading

Reporting by Binbin Huang, Cheng Leng, Samuel Shen, Scott Murdoch; Editing by Sumeet Chatterjee and Sam Holmes

Our Standards: The Thomson Reuters Trust Principles.

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