Xi Jinping is acting as backstop for Chinese mainland stock markets: a dangerous position to take if his long-term aim is to develop the country’s capital markets and eliminate price distortions in the economy.
Faced with tumbling stock markets, the government used a plethora of measures to prop up share prices in June and early July including a rate cut, suspension of IPOs and setting aside Rmb100 billion for margin finance services.
The measures illustrate the importance of wealth creation from a rising stock market to Xi’s “Chinese dream” of a prosperous nation.
Mature capital markets would also reduce entrepreneur’s reliance on bank loans, facilitate the privatisation of state-owned enterprises and help maintain the country’s economic growth.
However the government’s recent meddling in the stock market could trap it into constantly micromanaging retail investors’ expectations and result in stocks continuing to trade with little relation to underlying fundamentals.
That in turn will impede the government’s ability to utilise capital markets to facilitate badly needed structural reforms. It will also make it more likely that MSCI would continue to delay admitting China A shares into its emerging-market indices.
Perhaps the biggest risk for Beijing’s micromanagement of the stock market is a growing sense that its levers are no longer so effective. Global financiers usually take comfort in the government’s ability to contain major risks. Maintaining confidence is as important to financial stability in China as the actual policy tools themselves.
See Data Story on Page 4 for the changing fortunes of China’s markets in graphics.
In this issue we also explore how banks are grappling with the issue of diversity on Page 14 and we bring you the Top 25 Women in Finance across the Asia-Pacific region on Page 18.
To mark Singapore’s 50th anniversary we take a look at the island city state as a financial hub including the future of the stock exchange on Page 34, its biggest banks on Page 36 and the industry of private banking on Page 38.
About FinanceAsia Magazine
Established in 1996, FinanceAsia is the leading publisher of financial news in the Asia-Pacific region. Our combination of print and online products provide the latest news, analysis and insight into Asia’s financial markets.
Published monthly from our office in Hong Kong, FinanceAsia magazine provides our readers with the latest financial trends, interviews, features and investigative reports. The publication has a readership of key decision-makers at corporations, governments, investment and commercial banks, institutional investors, asset managers, brokers, traders and financial intermediaries.
Our regular sections include:
We look at the key data behind a topical theme in Asian finance, showcased with an array of graphs and tables.
A monthly opinion column from the FinanceAsia editorial team. We provide our thoughts on a topic making the headlines.
Deal of the Month
Our regular two-page spread with its signature artwork and in-depth analysis examines the equity, debt or M&A deal that we feel has had the biggest impact on the Asian capital markets that month.
For company CEOs and CFOs, what investors think is a critical concern, and in this column we help them understand just this. Each month we speak to a Chief Investment Officer of a top fund and outline their views on corporate governance, what stocks they like and where they expect to generate the best returns.
A monthly opinion piece from a respected author or commentator on Asian business, finance or economics.
People on the Move
Here we summarise the key hires, fires and moves at the region’s banks, highlighting at least one major move each month.
We examine the major primary markets deals of the month and comment on the quality of the debt or equity transaction and the secondary market performance.
The Arts of Finance
A light-hearted look at investment opportunities surrounding the arts business in Asia.