China’s economy is tumbling down due to the coronavirus outbreak. Stocks are falling, while investors are moving on to safe-haven assets.
Chinese authorities are trying to reduce the panic on the market. They are concerned that if fear isn’t alleviated, China could end up completely isolated.
The airlines are already suspending flights, and other governments evacuate their citizens. Such a situation is very damaging to the country.
To help the government in that goal, CSRC resolved to support those companies, which suffered most from the China stock market’s downfall.
Still, they believe the outbreak’s impact on China’s economy will be short-lived. The China Securities Regulatory Commission stated such opinion after balancing various factors. However, they have already begun working on new projects.
CSRC is considering to launch hedging tools for the A-share market, hoping it will help to reduce market panic. And they will suspend evening sessions of futures trading from today.
Moreover, the companies with expiring stock pledge agreements may apply for extensions with securities firms. CSRC will also advocate corporate bond investors to extend the maturity dates of debt.
The China Securities Regulatory Commission hopes these measures will prove successful. Without that, China’s economy may suffer severely, which, on the other hand, will cause other countries’ economies’ damage too.
China’s Central Bank Injects Liquidity
China’s stock market was due to re-open last Friday after it closed for the Lunar New Year period. But recent events caused the re-opening date to move to Monday.
Meanwhile, the Chinese government assured people they would use all monetary policy tools at their disposal to support firms suffering from the china virus epidemic.
So China’s Central Bank stated on Sunday after the markets open, it would inject 1.2 trillion yuan of liquidity. The total liquidity in the banking system, then, will be 900 billion yuan higher after the injection than it was in the same period in 2019.