The Chinese Central Bank adjusted its standard policy and poured additional funds to the financial system, trying to reassure the markets. Previously, investors scared Beijing measures to tighten regulation in a number of industries, and the sale of shares began on stock exchanges, Bloomberg writes.
People’s Bank of China supported liquidity in the framework of transactions for the purchase of securities with the obligation to return for 30 billion yuan (4.6 billion dollars), increasing the volume from 10 billion yuan for the first time since June 30. This infusion of money is regarded as a signal that regulators expect to calm the situation that has developed in the markets after the appearance of information on reforms in the country’s educational sector.
“China’s People’s Bank added liquidity now to calm and support markets. In addition, the demand for funds is more, because the end of the month is approaching, there is some deficit,” explained Min Min, investment bank analyst CITIC Securities.
Liquidity operations July 29, after representatives of the Regulator of China’s securities market met with the leaders of large investment banks in the evening of July 28. The state media also published a series of articles from which it can be concluded that crushing measures went too far. Some analysts assumed that the funds associated with the government could start interfering with the situation to support markets. As a result, the exchange index in Shenzhen CSI 300 rose by 1.89 percent.
To the collapse of stocks on Chinese exchanges at the end of July, information was given information about the new tightening of the rules of business concerning the companies of the educational sector. Beijing’s intention to seriously tighten the requirements for the work of such organizations became known on July 23. It was assumed that they would not be allowed to attract capital and go to the stock exchange. Investors panic also contributed to the measures for the technological sector companies, including the TENCENT penalty.