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彭博社:二刘一石三鸟 轻典治乱世

China’s New Strategy for Curbing World’s Worst Stock Slide (3)
2018-10-18 08:43:42.335 GMT
By Bloomberg News
(Bloomberg) -- China’s efforts to arrest destabilizing declines in domestic stocks in recent years have become so well recognized that market players coined the term “the national team” to describe buying by state-owned funds. In the latest bout of turmoil, there’s been a twist.
 
It’s local authorities who have been most active to cushion what’s been a 30 percent plunge in the Shanghai Composite Index from its January high. Officials in the southern cities of Shenzhen and Shunde as well as Beijing’s Haidian district have moved to help listed firms from their areas, according to local authorities and media reports.
 
Rather than the across-the-board purchases seen in efforts led by the central government in the wake of a $5 trillion sell-off in 2015, this time around aid appears to be channeled to specific companies in need of liquidity support. Many are linked to share pledging -- the practice of taking out loans using stocks as collateral. Stock slides spur brokerages to dump the collateral, in turn worsening the market rout and making it all the tougher for the companies involved to find financing.
 
Tech-hub Shenzhen, in China’s south, allocated tens of billions of yuan to reduce risks from share pledging and help liquidity of publicly listed companies registered in the city, according to Shanghai Securities News. Shenzhen H&T Intelligent Control Co. and Hybio Pharmaceutical Co. confirmed that they are among the beneficiaries of the support.
 
Triple Whammy
 
“It’s likely that this is guidance handed down by the central government,” said Yin Ming, vice president of investment firm Baptized Capital. While the intervention of national-level state-run funds spurs “broad-based gains in both good and bad firms and inflates valuation bubbles, this is more targeted,” he said.
 
Yin said the approach “kills three birds with one stone.” It avoids the more wasteful nation-wide approach pursued in 2015, when efforts included asking brokerages to contribute 100 billion yuan ($14 billion) to a market-rescue fund. It also supports employment amid China’s economic slowdown, and may help local stocks.
 
Equities traders may not be warming up to the idea. At least, it’s not offering much solace for the broader market.
 
Worst Performance
 
The Shanghai Composite closed at a fresh four-year low on Thursday, cementing its position as the worst global benchmark. China’s market capitalization is down some $3 trillion, knocking it down one notch to number three in global rankings.
 
Shenzhen’s Hybio and Shenzhen H&T each lost at least 5 percent Thursday. Some local stocks fared better after the Beijing branch of the China Securities Regulatory Commission set up a 10 billion yuan fund to support private-sector, publicly listed technology firms in the city’s Haidian district. Beijing Wanji Technology Co. jumped by the 10 percent daily limit for a second day on Thursday and China National Software & Service Co. gained 12 percent over two days.
 
Targeted rescues have also looped in Industrial & Commercial Bank of China Ltd., the nation’s biggest lender by assets. ICBC expanded a debt-to-equity swap program this week for a clutch of private firms. And the securities regulator has separately advised creditors of Beijing Orient Landscape & Environment Co. not to engage in forced sales of pledged shares. Still, traders remain jumpy. Lighting maker Sanan Optoelectronics Co. suddenly plunged by the maximum allowed in morning trading on Wednesday, and is down more than 9 percent over the past two sessions. About 30 percent of the company’s shares have been pledged as collateral for loans, according to China Securities Depository and Clearing Corp. data.
 
The bottom line: it remains uncertain whether the local-led approach will reverse the downtrend in China’s domestic market, says Bifan Shen, chief strategist at Shenzhen Spruces Capital Management Co.
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