© Reuters. FILE PHOTO: A man in a mask walks through the Shanghai Stock Exchange building in the Pudong financial district in Shanghai, China on Feb.3, 2020. REUTERS / Aly Song
SHANGHAI (Reuters) – A Chinese state-owned securities newspaper called for calm Wednesday after investors surrendered mainland stocks for a second day amid concerns about the impact of stricter government regulations.
Regulatory measures targeting the education, real estate and technology sectors have resulted in heavy sales in Chinese markets this week, unsettling global investors about the prospects for investing in Chinese companies.
In a front-page comment, the state-run Securities Times said on Wednesday that systemic risk "does not exist in the A-share market as a whole".
"Macroeconomics is still in a steady recovery phase and short-term fluctuations do not change the long-term positive outlook for A-shares," the comment said.
"The recent market decline, to some extent, reflects a misinterpretation of politics and a release of emotions. Economic fundamentals have not changed and the market will stabilize anytime."
Other major securities newspapers repeated the comments in market reports.
In a cover story quoting domestic fund managers, the official China Securities Journal said the sell-off was a "structural adjustment", a prolonged slump was unlikely and the market was not exposed to systemic risk.
A report in the state-run Shanghai Securities News quoted domestic analysts as saying that the sell-off will not continue and that the market will gradually stabilize.
"For institutes, the decline offers the opportunity to position themselves in high-quality stocks," it said.
What began as a stock sell-off on Monday spread to the bond and currency markets by Tuesday afternoon, dropping the yuan to psychologically significant levels and pushing Chinese government bond yields and the cost of insuring against default in China dollar debt higher.
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