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Prop-up-aganda? Chinese state media is encouraging 1.3bn people to buy more equities
Policy makers in Europe and the UK are attempting to encourage equity markets through a range of fiscal measures – over in China, the government is also attempting to boost stocks, but in a slightly more pro-active manner.
State-run newspapers Xinhua News Agency and the People's Daily and broadcaster CCTV appear to have started a campaign to get the world's biggest population – 1.3 billion people – to buy more stocks.
Xinhua has published stories including “China needs a bull market with quality” and “How could the stock market be invigorated?” in the last few days. Meanwhile, reports from the People’s Daily and CCTV last month showed how money is flowing from property into the stock market.
As well as appealing to investors through the media, the government has said it will more than half fees for individuals and institutions opening share accounts, cut trading fees, and is hosting presentations by major banks.
The media assault follows a pronounced slump in the Shanghai Composite Index, which lost $460bn market value in the three years to May, with investors liquidating almost five million trading accounts.
According to Bloomberg, a shift toward equities may help the government “reduce speculative investing in the property market and curb risks tied to lightly regulated wealth-management products, whose assets rose to a record $2.1 trillion in the first half”.
The pace of new account openings has doubled since May, since which time the Shanghai Composite has risen 12 per cent.
Shanghai Composite Index (SHComp) over the past year (Source: Bloomberg)