© Reuters. File photo: A Chinese Renminbi banknote can be seen in this illustrated photo on May 31, 2017. REUTERS/Thomas White/Illustration
Shanghai (Reuters)-Chinese state media said on Thursday that assets denominated in yuan are still attractive, and short-term market panics do not represent long-term value. This is the latest official move to boost investor confidence.
The verbal support for the market comes as the brutal sell-off of Chinese stocks has raised concerns about spillover effects in other asset classes, including bonds and foreign exchange.
“China Securities Journal” stated in its front-page comment, “In general, investment institutions generally believe that the current market correction is still a short-term event shock, rather than a reversal caused by fundamental changes.”
“The broad investment trend that supports RMB-denominated assets will not be reversed.”
It added, “From a fundamental point of view, China’s economy continues to improve steadily, and the earnings expectations of listed companies have improved substantially.”
Earlier this week, regulatory measures for the education, real estate, and technology industries triggered a massive sell-off in the Chinese market and made global investors frustrated and uncertain about the investment prospects of Chinese companies.
The Chinese and Hong Kong stock markets rebounded sharply in early trading on Thursday, with the blue-chip CSI 300 index rising more than 1%.
Another comment on the front page of the Economic Daily hosted by the State Council of China also stated on Thursday that the recent correction in the stock market was mainly driven by emotions.
According to the report, China “capital markets have the foundation and capabilities for stable and healthy development.”
At the same time, the state-backed China Daily quoted an unnamed source on Thursday as saying that China still supports domestic companies seeking overseas listings, and regulators will soon introduce more measures to further open the capital market to foreign entities.
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