20/04/2015 09:43 AST
Despite a weak start on Monday as investors digested Beijing’s new market measures announced late last Friday, the Shanghai Composite Index SHCOMP, -1.64% managed to set a new seven-year intraday high.
The recent run-up for stocks is making big news in China. Here’s what the media were saying about the market Monday — as you’ll see, most of it is very optimistic about the future direction of shares:
Can’t stop the market
“New rules to curb margin trading won’t change the bull market, “ the People’s Daily (the Communist Party’s official newspaper) said Monday in an editorial. “They are aimed at regulating the market and will be positive for the market in the long term.”
It noted that some investors have been speculating that the Chinese government may be seeking to suppress the hot stock market with Friday’s moves by curbing margin trading and encouraging short-selling. However, the report quoted Ren Zeping, managing director for Guotai Junan Securities, as saying that “no matter whether the news is bullish or bearish, it won’t change the current big trend of a bull market.”
The report concluded that “the bull market is not over yet. Nevertheless, hopefully we’ll enter a market phase of a ‘slow bull’” with more moderate gains.
‘A healthy bull’
The state-run Xinhua News Agency also published a special report Sunday night, which like the People’s Daily, quoted Guotai Junan’s Ren, focusing on his desire for less volatility.
“Transitioning from a quick bull to a slow bull will be a win-win situation for both the regulators and markets, while a sharp rise or a steep fall will be a lose-lose,” Ren told Xinhua.
The report looked not only at Friday’s new market rules, but also a sharp easing of monetary policy announced earlier Sunday by the People’s Bank of China. All of these government actions were intended to fight the economic slowdown and create a “healthy bull market,” Xinhua said.
Year of the Blue Chip
“The upward trend of stock markets will not change, despite short-term volatility,” the state-run China Securities Journal said on Monday, claiming Sunday’s central-bank move — which involved cutting banks’ required reserve ratio — had laid a solid foundation for the bull market and was a positive factor for stocks.
While it admitted that some shares were entering bubble territory, the report said investors were reacting by turning to reliable blue chips, as well as the “lowland stocks” (meaning “dogs,” or stocks with lower valuations).
“The bull market is entering a ‘blue [chip] season’,” the newspaper said.
However, the Shanghai Securities Journal — though it’s owned by Xinhua — struck a more conservative tone, warning investors in an editorial Monday that they should “take on a cautious strategy” and reduce their equity exposure, or even go entirely to cash.
Stock investors should take a “wait-and-see” approach, it said, adding that the possibility of a bubble can’t be ignored.
It agreed with the other reports that the new margin and short-selling rules were aimed at making the market healthier rather than trying to tamp down on gains. But, it said, that doesn’t mean Shanghai stocks will “continue to rise sharply.”
MarketWatch
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