Asset management giants Wells Fargo and Franklin Templeton have voiced their concerns about the Chinese market’s mismanipulation.
According to Bloomberg, China’s shambolic measures to support its ailing equity market have drawn a lot of flack from foreign investors, with Wells Fargo calling the recent ban “postpon(ing) the inevitable” and UBS naming the move “extreme.”
Franklin Templeton’s Mark Mobius meanwhile, had this to say:
“It suggests desperation… …(i)t actually creates more fear because it shows that they’ve lost control.”
Jim Chanos, always quick with a good, Horatio Caine-like one-liner, had this to add:
“When Xi Jinping stressed the ‘decisive role of market forces,’ I don’t think this is what he had in mind.”
The PBoC, together with other Chinese regulators, have surprisingly succumbed to the perennial central bank delusion that they’re somehow above the market, allowing their first attempt in reviving confidence to miserably fail.
Their next moves didn’t do too good either, while their latest effort – a ban on insider selling – coupled with the suspension of over 1,300 listed companies, does nothing but pile up sellers and scare away those they want most – buyers.
While this may have been the case the past few days, one investment bank still sees “rainbows after the rain:”
Goldman Sachs is sticking with its optimistic forecast in the face of record foreign outflows, the biggest-ever selloff by Chinese margin traders and a chorus of bubble warnings from international peers. The call hinges on the success of unprecedented government efforts to revive confidence among individual investors who watched equity values tumble by $3.2 trillion over the past three weeks.
“It’s not in a bubble yet,” Lau said in an interview. “China’s government has a lot of tools to support the market.”
Photo credit: Jundy Tiu via Flickr