The China Securities Regulatory Commission reacted with “calm” to the worst slide the A-share market has suffered in more than eight years, according to a story on Chinese financial news site Caixin Online.
No one worked overtime on Aug. 24 awaiting orders from higher-ups to get a handle on the meltdown, a person close to regulator reportedly said. This compares with the frantic intervention of a month earlier.
“Even though the Shanghai Composite Index fell by almost 9% no one was required to put in extra hours after work,” a person close to the China Securities Regulatory Commission (CSRC) said. “In the past whenever the market fell too sharply, bureaus related to monitoring trading data from stock exchanges had to work overtime and stand by for orders from higher-ups.”
The source says the agency also didn’t ask for special reports on trading activities as it routinely does after sharp market swings.
Caixin says the regulatory response was “surprisingly muted” in view of the fact that the SHCOMP plunged by 8.49% by the close of trading, the index’s largest single-day decline since March 2007.
The CSRC’s new indifference reflects a new attitude about intervening in the stock market, another person close to the agency was quoted as saying. Officials “no longer feel the imperative to comb through data for clues to what triggered the fall,” the source said.
The source says he believes the CSRC has decided to be more cautious about intervention and do it less.
Asia Unhedged thinks its unclear if this signals a real shift in the agency’s market stance. The CSRC did say at an Aug. 14 press conference that it’s going to allow market forces to play a bigger role in determining stock prices. “With market fluctuations gradually shifting to normal, from wild and abnormal, we should let the market exercise its function of self-adjustment,” said the market watchdog, according to Reuters.
But other market helmsmen aren’t being so passive. The Chinese central bank on Tuesday announced its fifth cut on interest rates since November of last year. The PBOC also lowered the requirement reserve ratio (RRR), helping to rally global stock markets.