Regulator rules out rescue measures

China's securities regulator has denied that the capital market is deteriorating and ruled out rescue measures despite investor concerns over losing money in a sluggish market.

As of last Friday, 2,475 listed companies disclosed their interim results, and their combined net profits reached 1.08 trillion yuan ($170 billion), down only by 0.4 percent from a year ago, the Investor Protection Bureau under the China Securities Regulatory Commission (CSRC) said in a statement released Sunday in response to investors' questions.

"This indicates that the general situation is not that bad," the CSRC said, urging investors to think rationally.

The regulator said the government's new measures and policies are aimed at the long-term healthy development of the capital market, and investors should not view them as efforts to boost the market.

The rise and fall of the stock index is the reflection of many factors, some of which is attributable to inactive trading and some to problems of the listed companies as well as the economic downturn both at home and abroad, the CSRC said in response to the question of why investors continue to suffer heavy losses, after a raft of measures have been put in place.

The benchmark Shanghai Composite Index has dropped to a new low since February 2009 despite the CSRC's efforts to resurrect the market since early this year. These measures include adjusting the rules for new listings, tightening of disclosures by listed companies, encouraging dividend sharing by the listed companies, provisions for the delisting of poor performers, as well as raising the investment quota for qualified foreign institutional investors for the Chinese equities market.

"Currently the value of China's stock market is at a historic low compared to other major international markets, and it is a good time for long-term investment," the CSRC said.

The CSRC statement indicates that, unlike the past, "there will be no government interference this time even if the market is bearish," Dong Dengxin, director of the Financial Securities Institute at Wuhan University of Science and Technology, told the Global Times.

Yet investors are reluctant to believe that the regulator will leave the market to deteriorate and will continue to shun rescue measures. "The regulator always acts differently than what it says," said an individual investor surnamed Liu.

As China's stock market has long been more policy-oriented than a barometer of the economy, the retail investors are used to relying on the regulators to intervene and boost the market when the market tumbles beyond a point.

There has been no new IPO approval since August, according to the CSRC website, a sign that the government is trying to boost the market by controlling the supply of new stocks.

The CSRC had also suspended IPO approval between September 17, 2008 and March 30, 2009 in order to cut the listing of new stocks in a faltering market following the global financial crisis.

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