China’s regulators try to engineer a stockmarket rally

CALLING THE bottom after share prices plunge is a crapshoot. Though investors parse trading charts, bond yields and commodity prices for clues, timing the market remains more a matter of luck than skill. But in China the signal is, at least in the short term, a lot clearer: just wait for the government to barge in. So it proved on October 19th, when four senior financial officials, including the central-bank governor, made a rare co-ordinated effort to talk up beleaguered stocks. By October 22nd, the next trading day, the market had soared by nearly 10%.

Though it later gave back some of those gains, the rally was a sharp break from the nearly relentless declines of recent months (see chart), which had made Chinese equities the world’s worst this year in local-currency terms. The market withstood Wall Street’s sharp drop on October 24th, ending the next day flat after an early swoon.

China’s stockmarket...



via The Economist: Finance and economics Business Feeds

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