China intervention powers bears
The Chinese stock market has gotten back into a battleground. We observe growing bearing sentiment, while state-run funds are sparking another surge.
For the last six days, China’s Shanghai Composite Index has posted daily losses prior to ascending close to the end of the trading session. Simultaneously, PetroChina Co and Industrial & Commercial Bank of China Ltd were ahead of the rebound. By the way, some local branches of the securities regulator requested brokerages, mutual funds as well as listed companies to have the market stabilized during annual parliamentary gatherings this month.
The resumption of late-day revenues, a typical thing during the climax of the government’s market emergency measures carried out in July, has put traders into a difficult position. As follows from downbeat economic data, shares should go down, however, state intervention gives an opportunity to derive revenues from short-term surges. That’s another sign of how government interference has drastically spoilt China’s pledge to enhance the role of market forces in the second largest economy in the world.
Moreover, there might be funds purchasing in the afternoon and bringing up the index once again. However, before the end of the National People’s Congress, the market won’t get a clear direction.