June 20, 2018 / 1:20 AM / 6 months ago

China media projects confidence in face of stock market slump

SHANGHAI, June 20 (Reuters) - China’s state media on Wednesday projected confidence in the country’s stock markets in the face of a rout the previous day that was triggered by trade war fears, while over 30 listed firms announced share purchase plans by major shareholders in a bid to stop the bleeding.

Shanghai stocks tumbled 3.8 percent on Tuesday to a two-year low as Washington’s new tariff threats against China raised the spectre of a full-blown trade war.

The slide triggered fresh margin calls.

In a front-page article, the Shanghai Securities News said “favourable” factors that should support stocks had not changed, namely a steadily improving macroeconomic situation, reasonable and stable liquidity conditions, and a sound basic mechanism of market operations.

“A heavy decline reflects the market’s pessimism in the short term, but after an emotional release, investors should rationally view the market’s ups and downs and objectively understand the short-term and long-term factors that affect the market’s operation,” it said.

The China Securities Journal, also on its front page, highlighted China’s fundamentals, saying the economy was “fully resilient”.

It quoted analysts as saying valuations of Chinese yuan-denominated A-shares were at historic lows.

“At present, the opportunity is greater than the risk. After the market bottoms out it will return to a track that is dictated by fundamentals,” it said.

The joint effort by the country’s major state-run financial newspapers to soothe jittery investors came after the central bank on Tuesday night said Governor Yi Gang had urged investors to remain calm, noting that ups and downs were normal in stock markets.

Dozens of companies, including Kuangda Technologies and Inner Mongolia Xingye Mining, announced plans by shareholders after Tuesday’s market close to buy shares in the coming months.

Meanwhile, companies including Zhengzhou Sino-Crystal Diamond, Meson Fintech and Guilin Tourism said late on Tuesday that some of the companies’ shares pledged by major shareholders face the risk of forced liquidation. (Reporting by John Ruwitch and Samuel Shen Editing by Shri Navaratnam)

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