China steps up efforts to stabilise stock markets as confidence slumps

Chinese authorities have stepped up efforts in recent days to bolster financial markets in a sign that Beijing is growing uncomfortable with the pace of declines in stocks and the yuan. 

Mainland exchanges this week asked some investment funds to avoid net selling equities. Officials requested state-owned banks to escalate intervention to support the yuan, while also encouraging companies listed on the tech-heavy Star Board to buy back shares. The securities regulator said late Friday it will slash handling fee in stock transactions and study extending trading hours for equities and bonds. 

The moves complemented the People’s Bank of China’s surprise interest rate cut this week, which was the biggest reduction since 2020, and its most forceful yuan fixing guidance ever on Friday. So far, the measures have yet to buoy the markets. A gauge of Hong Kong-listed Chinese stocks was on course for a third-straight week of losses. The Hang Seng Index is down more than 8 per cent this year, ranking among the biggest global losers. The gauge entered into a bear market on Friday. While the yuan eked out marginal gains against the dollar on Friday, it has fallen more than 5 per cent this year. 

Also, sentiment has been shaken after top property developer Country Garden Holdings lurched toward a possible first default.