Fidest – Agenzia giornalistica/press agency

Quotidiano di informazione – Anno 34 n° 296

Expert comment on the fall in Chinese stock markets

Posted by fidest press agency su mercoledì, 6 gennaio 2016

Warwick Business SchoolProfessor Kamel Mellahi of Warwick Business School, Professor of Strategic Management and researches business in China said: “The Chinese stock markets are set for choppy waters and share prices will continue to see-saw as China seeks to recalibrate its economy. Retail investors, which account for a large portion of stock market trade in China, are not in it for the long haul and are prone to panic. It is to be expected that they react to short-term blips about the health of the Chinese economy.
“This stampede type sell-off is often driven by a herd mentality but the concerns that triggered it in the first place were very strong. The fundamental reasons that triggered the sell-off are the continued shrinking of manufacturing activities and the expected lifting of the ban, introduced during last summer to halt the stock market rout, on share sales by major investors.”One does expect the Chinese government to intervene strongly and publicly to prop up share prices. This will undermine its pledge to let market mechanisms have more influence, but perhaps more importantly, it has a much bigger fish to fry. It’s keeping its eyes on the management of economic reforms to rebalance its economy. “The stock market fluctuations may make the news but they are not a true reflection of the Chinese economy. Also, newly introduced mechanisms such as the ‘circuit breaker’ are expected to manage sell-off panic. Interventions to support the stock market such as buying equities and perhaps even reinstating the ban on share sales by large investors might be necessary to calm things down.”

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