China state media commentary urges investor respect for market

FAN Editor
A trader stretches on the trading floor at the Shanghai Stock Exchange in Lujiazui Financial Area before Britain's Chancellor of the Exchequer George Osborne's visit in Shanghai
FILE PHOTO: A trader stretches on the trading floor at the Shanghai Stock Exchange in Lujiazui Financial Area before Britain’s Chancellor of the Exchequer George Osborne’s visit in Shanghai, China, September 22, 2015. REUTERS/Aly Song

July 9, 2020

SHANGHAI (Reuters) – Investors should respect the market, manage risks and pursue rational investments, Chinese state-run media warned in commentary on Thursday, after Chinese stocks accelerated a recent rally and hit multi-year highs.

Shares in mainland China extended their winning streak into a seventh session on Wednesday, supported by hopes of an economic recovery, a conducive regulatory environment and retail investor enthusiasm.

The commentary said experience suggested that economic fundamentals were always the basis for changes in valuation, and only a long-term bull market could yield sustained profits.

“The tragic lesson of abnormal stock market volatility in 2015 remains vivid, warning that we must promote a healthy and prosperous stock market in a correct posture,” the paper said.

The recent stellar performance of China’s share market has prompted comparisons to a boom and bust in 2015-2016, fuelled by illegal margin lending, that saw the benchmark Shanghai index fall more than 40% from its peak in just a few weeks.

China’s securities regulator published a list of 258 illegal margin lending platforms and their operators on Wednesday to try to tame the bull run and avoid a similar crash.

On Monday, a commentary published by official media said China needs further share market gains to fund a rapidly developing digital economy and strengthen its hand in intensifying power rivalries.

(Reporting by Winni Zhou and Andrew Galbraith. Editing by Gerry Doyle)

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