MNI POLICY: China Officials Appeal for Calm On Market Tumble

     BEIJING (MNI) - China's vice premier Liu He and his top financial

regulators on Friday attempted to calm investors spooked by the biggest stock

market rout in four years, touting measures to arrest the plunge. 

     Liu spoke to state media outlets, including the Xinhua News Agency, in a

rare group interview, listing detailed plans to revive an economy straining

under growing protectionism pressures, weak consumption and declining

investment. Early in the day, before the markets opened, the governor of the

central bank, chairmen of the securities, banking, and insurance watchdogs all

made the case that the economy is sound and appealed to investors to stay calm. 

     The rare joint public relations push by the officials underscored the risk

of the Chinese financial markets falling further.

     In October alone, China's A-share market has plunged 12% in nine trading

days, with the Shanghai Composite Index (SCI) breaking below the key 2,500-point

yesterday, a level unseen in four years. The market is losing confidence as the

trade was with the U.S., disappointing economic performance and financial

markets failing to channel liquidity into the credit-starved real economy.

     The concerted efforts seemed to have made an immediate initial impact, as

the SCI closed up 2.58% at 2,550.47, the biggest bump since Aug 7. 

     Here are main points made by the senior regulatory policymakers:

     --The stock market correction has created opportunities for long-term

investment, Vice Premier Liu said. The impact from trade conflicts has been

mostly psychological, with no substantial damage. "China and the U.S are in

contact," Liu said. China will further enhance state-owned enterprises (SOE)

reform and boost the private sector by encouraging mergers and reorganization of

leading private companies by supporting corporate bond issuance, Liu said.

     -- The stock market is these lows despite stable economic performance with

good momentum, People's Bank of China governor Yi Gang said. The PBOC is looking

at targeted measures to relax corporate funding difficulties and will maintain

liquidity at a reasonable and stable level, said Yi. 

     -- The abnormal volatility in financial markets isn't in line with the

economic fundamentals, Guo Shuqing, Chairman of the China Banking and Insurance

Regulatory Commission, said. The senior banking regulator will look to channel

wealth management products of banks and insurance funds into stock market,

according to Guo.

     -- China will encourage local government funds to rescue troubled listed

companies struggling to refinance, said Liu Shiyu, chairman of the China

Securities Regulatory Commission. The regulator will help support small and

medium-sized private companies issuing high-yield bonds, private equity bonds

and other special debt products, Liu said.

--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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