Chinese authorities are so good micro mangers and engineers they simply just can’t bear the thought of free market operations.
After trying to manage the country’s stock market drop, punting the government’s reputation at stake and after incredible blow up of the effort (as the stocks kept dropping, in spite of more than $200 billion intervention) they are still at it, and through its supervision effort.
According to reports from Reuters, Chinese regulators have stepped up their regulatory efforts so much, it is likely to lead to another disaster both in the short term and longer term.
Fund managers are now called on regularly to explain from their trading strategies to everyday buy sell amount.
These intense investigations has spooked investment communities who are unsure if they are called upon to help with inquiries or under suspicion.
According to one fund manager, his friend, head of another large fund was recently summoned by regulators and the investment community is so spooked that he called him to take care of his family if does turn up in jail or somewhere.
Beijing’s these sincere efforts to curb a rout is likely to yield opposite results as funds withdraw from the market, especially the foreign ones and these practices severely damages country’s longer term outlook.
China’s benchmark stock index closed -2.5% today at 3080.
The material has been provided by InstaForex Company – www.instaforex.com