Stocks News
- Stock regulators warn risks growing
Date: 17-Oct-2007 Sources: (Shenzhen Daily)
CHINA'S securities regulators said the nation's capital markets hold 'great risks,'raising the prospect of further government measures to cool speculation after the benchmark stock index almost tripled this year.
The China Securities Regulatory Commission must protect investors and prevent market risks, vice chairman Tu Guangshao said at the Communist Party congress yesterday. The country's investors should be 'more rational?since 'the higher the share prices, the greater the risk,'chairman Shang Fulin said.
The comments underscore government concern about a possible bubble after the value of stocks grew by US$2.6 trillion this year. The CSI 300 Index, the world's most expensive relative to earnings, has jumped 51 percent since the government tripled a tax on securities trades May 30.
'After the congress, China will continue tightening macroeconomic policies and allowing more funds to flow overseas to cool the stock market,'said Tony Zheng, who helps oversee the equivalent of US$3 billion at Bank of Communications Schroders Fund Management Co. in Shanghai. 'This will start affecting company results and valuations in the fourth quarter.'
The regulator would probably be careful not to introduce measures that target stocks directly, Zheng said. 'They saw how much stocks were hit when the stamp tax was introduced in May.'
Shang Fulin's remarks about the capital markets came amid recognition that China still needs to develop its financial system overall. Its financial infrastructure is 'incomplete,'making monetary policy less effective, chief currency regulator Hu Xiaolian said in a speech to the congress yesterday.
Hu, director of the State Administration of Foreign Exchange, said China can't solve financial problems by closing markets and needs more effective policies that are 'forward looking.'
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