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Gloomy markets defy expected growth (2)

By Chen Jia  (China Daily)

11:07, December 17, 2012

Positive statement

The benchmark index surged for two straight days after Dec 4 from the 46-month low point when the Politburo Central Committee of the Communist Party of China released a statement that pledged it would continue to stabilize economic growth.

Existing macroeconomic policies will remain targeted, effective and finely tuned, according to the statement. It vowed to promote urbanization and reforms in the areas of taxes, the price of resources and healthcare.

In addition, the statement also highlighted eight explicit requirements to avoid extravagance and bureaucracy, including cutting spending on official trips and reducing traffic controls during political events.

It is a signal that the new leaders are making efforts to improve work efficiency, said Helen Qiao, chief economist for Greater China at Morgan Stanley.

The statement provides hope for more reforms in the near future and will strengthen market confidence, Qiao said.

On Dec 5, the Shanghai composite index jumped by 2.87 percent, the biggest one-day increase since Sept 7.

"A reversal in the stock market is likely to take place in the short term," said Li Daokui, director of the Center for China in the World Economy at Tsinghua University.

Unreasonable worries on future economic downside risks by investors, especially individual shareholders, have weakened confidence, which was the most important reason for the sharp decline of the stock indexes, said Li.

【1】 【2】

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