BEIJING — Vice-Premier Liu He said on Oct 19 many factors have caused obvious stock fluctuations and declines in China recently, including interest rate hikes by major economies’ central banks and the Sino-US economic and trade frictions.
The global stock market has started to see fluctuations and downward movements after the interest rate increases, and the US stock market has also seen obvious corrections, Liu, also a member of the Political Bureau of the Communist Party of China Central Committee, told Chinese reporters.
“The Sino-US economic and trade frictions have also caused impact on the stock market, but the psychological effect is bigger than the actual impact, frankly speaking,” said Liu.
“China and the United States are now in contact with each other,” he said.
Apart from external factors, China’s economic restructuring has also had an inevitable effect on the stock market, according to Liu.
Changes in market expectations and uncertainties over the future economic environment also influenced the behavior of investors, who are very concerned about issues such as the development of the private economy and property rights protection, he said.
In addition, some technical factors existed, Liu said, citing passive reduction of stock positions amid market slides as an example.
Citing opinions of international investors and domestic analysts on the Chinese stock market, Liu said China is becoming the most valuable market for investment, from the perspective of global asset allocation.
Market bubbles have sharply contracted, the quality of listed firms is improving, while valuations are at historic lows, he said.
“Many institutions therefore suggest that great attention be given to stock bourses in China, believing that China’s stock market already has a relatively high investment value,” Liu said. With the aforementioned evaluation, Liu said he believed investors would make rational judgments.
“The corrections and sell-offs on the stock market are creating good investment opportunities for long-term and healthy development,” he said.