Mon, Sep 07, 2015 - Page 15 News List

Rout in Chinese stcoks almost at an end: PBOC

Bloomberg

The rout in Chinese stocks is close to ending and the nation’s financial markets are expected to become more stable, according to the head of the country’s central bank.

State intervention in the equity market prevented systemic risk and stopped the free-fall in shares, People’s Bank of China (PBOC) Governor Zhou Xiaochuan (周小川) said in a statement on the bank’s Web site on Saturday.

The yuan’s exchange rate versus the US dollar is also close to stabilizing, he said, after a meeting by finance ministers and central bankers from the G20 in Ankara.

The Shanghai Composite Index tumbled 39 percent since reaching a seven-year high on June 12, helping to erase US$5 trillion in value on mainland bourses, as traders cut leveraged bets.

Margin loans tracked by Chinese exchanges have fallen by more than half from their peak to about 1 trillion yuan (US$157 billion).

The shock devaluation of the yuan last month rattled world markets and sparked exchange-rate declines in emerging economies.

The leverage ratio has clearly dropped and the impact on the real economy is limited, Zhou said. He said there is no basis for long-term yuan depreciation and the government’s determination to deepen market reforms has not changed, while economic fundamentals are substantially unchanged.

Volatility in China’s stock markets is nearing its end, People’s Bank of China’s international department director-general Zhu Jun (朱?) said in an interview on Saturday in Ankara, after G20 finance chiefs flagged concerns about potential global spillovers.

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