China’s state-run financial media have been quick to reassure investors that the factors underpinning the year-long bull market haven’t changed despite last week’s losses.
According to a report from Reuters “official state-run financial newspapers in China published front-page commentaries on Tuesday arguing that the logic supporting the bull market has not changed, in apparent attempts to soothe sentiment after Chinese stocks dropped over 13% last week”.
The Securities Times said in an editorial that investors “needn’t panic” in the face of recent corrections, as long as the fundamental support for the market’s uptrend – reform and innovation – has not disappeared, according to Reuters.
The weekly decline on the benchmark Shanghai Composite index was the largest in percentage terms since June 2008, and was likely fuelled by a raft of margin calls forcing leveraged investors to close positions as market losses mounted.
After plunging more than 4% earlier today it appears the assurances have began to resonate with investors. The Shanghai Composite has closed Tuesday’s session up 2.2% .