Market fluctuations won’t shake confidence in economy

Source:Global Times Published: 2015-7-7 0:23:01

Monday was the first day of trading after a series of measures were adopted over the weekend to prevent another deep plunge in the Chinese stock market. Both the Shanghai and Shenzhen bourses have seen dramatic fluctuations, with the Shanghai Composite Index finishing the day up 2.41 percent, while the ChiNext Index dropped 4.28 percent. A-share stocks started with a surge of 7 percent, yet then tumbled into negative territory before rebounding. There is neither the sharp bull run which was expected to be caused by the emergency measures, nor the continued freefall that people are worried about.

Investors are still feeling daunted over the market. Nearly 1,000 shares listed on the Shanghai bourse fell to their daily limit, which caused a certain level of pressure, and more time is needed to restore market confidence. Following the government's measures, this situation should be deemed as steady.

Confidence is everything. But what exactly confidence is must be figured out. It is not only investors' collective optimistic judgment on the market, but also their capability of adapting to losses when the market is in trouble.

So far, whether the bull market will return after this major adjustment remains unclear for most investors. However, there aren't many who are determined to walk away altogether. A more prevalent attitude is selling their shares to stop losses when there is a rebound, while biding their time for the next opportunity. The Chinese stock markets have a large reserve of resilience.

Society should respond to the plunge and the rescue measures with more openness. Since they are in the financial domain, no political interpretation should be hyped up. This could happen to any country in the world, which would react in the same way as the Chinese government has.

Besides the tumbling stock market, all other financial systems in China are functioning well. The overall environment for stabilizing the market is positive and the resources to do so are abundant. Thus, the Chinese public can be more relaxed and confident.

The stock market has its own regularities. The dramatic decline burst quite a few bubbles and released some risks. But after the large-scale measures that were unveiled over the weekend, more strength has emerged to restore confidence. It is believed that these steps will take effect gradually, and this is the basic rule of the stock market.

China remains vigilant toward all kinds of issues and always takes precautionary measures at an early stage. The stock falls and the nation's steps to save it are in line with this logic. Many are analyzing the effect of the government's efforts, but no one believes that the country's economy is on the verge of a crisis because of the market fluctuation.



Posted in: Observer

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