The Chinese Securities Regulatory Commission (CSRC) has reaffirmed its support for the local stock market after issuing a statement rejecting a media report it was planning to withdraw government funds currently being used to stabilize the market.
“CSRC will continue to focus its work on stabilizing the market sentiment and preventing systematic risk from happening over the next stage,” the commission’s spokesman Zhang Xiaojun (张晓军) was quoted in a statement published on its website.
Market reaction was muted following the news. The Shanghai Composite Index was little changed on Monday, ending at 3992.11 points, up 0.88% from Friday.
The CSRC has cited as "irresponsible" a report published by a local magazine indicating a government plan to withdraw its funds from the stock market.
The Chinese government has launched an unprecedented package of measures including the set-up of a market stabilization fund to buy shares in a bid to rescue the stock market, which plunged 30% in the past month.
Zhu Guangyao (朱光耀), China’s vice finance minister defended these measures in London on Saturday, citing them as “correct” and declaring the market turbulence to be almost over.
Shanghai Composite Index fell from its June 12 peak of 5,166.35 points to 3,373 points on July 8, before climbing back to 3,957.35 points on July 17.
“The big correction is normal and natural after the market has gone up so much. The other reason is that the China stock market is not mature yet given the high leverage,” Zhu adds.
The China Securities Finance, the state-owned margin financing entity tasked to come to the stock market's rescue, is estimated to hold 1.58 trillion yuan in funds. It has, so far, invested an estimated 860 billion yuan (US$138 billion) in Chinese stocks to keep the market stable.
