Can the government prop up the stock market?

Can the government prop up the stock market?
Jun 6, 2008 03:43
YVONNE Points: Join Date: Nov 29, 2004 Status: offline	As the source of the biggest initial public offerings, China is preparing to make China Construction Engineering Corporation, another blockbuster, go public. The news reports that China Construction Engineering Corporation's IPO is expected to raise about 6 billion dollars, which is China's fourth biggest IPO and the biggest in the world so far this year behind Visa of the US. However, the market is different compared with that in last year. Last year, the Shanghai Composite Index of A shares nearly doubled and investors had taken about 150 percent profits from the stock market. This year, the index has fallen about 40 percent and the turnover per day has apparently reduced. At the same time, the authorities are trying to prop prices, for example, reduce the stamp tax on stock transferring. In April, the government had started to limit the sales of state-owned shares. Meanwhile, it has introduced activities such as margin lending to attract the investors' interest. However, the fund management companies have found that it is easy to attract the investors but hard to raise money. What do you think Chinese governments' methods? Can it prop up the stock market?

Jun 6, 2008 03:43

YVONNE
Points:
Join Date: Nov 29, 2004
Status: offline

As the source of the biggest initial public offerings, China is preparing to make China Construction Engineering Corporation, another blockbuster, go public. The news reports that China Construction Engineering Corporation's IPO is expected to raise about 6 billion dollars, which is China's fourth biggest IPO and the biggest in the world so far this year behind Visa of the US.

However, the market is different compared with that in last year. Last year, the Shanghai Composite Index of A shares nearly doubled and investors had taken about 150 percent profits from the stock market. This year, the index has fallen about 40 percent and the turnover per day has apparently reduced. At the same time, the authorities are trying to prop prices, for example, reduce the stamp tax on stock transferring. In April, the government had started to limit the sales of state-owned shares. Meanwhile, it has introduced activities such as margin lending to attract the investors' interest. However, the fund management companies have found that it is easy to attract the investors but hard to raise money.

What do you think Chinese governments' methods? Can it prop up the stock market?

Jun 13, 2008 04:18	#1
JIMMYB Points: Join Date: Feb 7, 2007 Status: Offline	I guess not. Last time, the government adopted some measures to save the market, for example, lowering the stamp tax on stock tradings. However, it didn't take much effect. This time, A shares has slumping about 11 percent in last three days. Some experts suggest that the government shouldn't intervene in the market. Otherwise, the situation might be worse.

Jun 13, 2008 10:11	#2
GARYKINKADE Points: Join Date: Jan 8, 2008 Status: Offline	Maybe a short term affect, government intervention (to save a financial institution) always assures that the tax payers will foot the bill for financial largess. I.E." the rich get richer and the poor get poorer".

Jun 14, 2008 00:52	#3
COOLSPRINGS Points: Join Date: May 19, 2008 Status: Offline	in east asia, political intervention works although it's not a variable in explaining the success of economy.

Jun 26, 2008 11:01

APAULT
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Join Date: Mar 11, 2006
Status: Offline

The economy is doing fine. Sure there are some issues like increased oil prices...but do they matter??? Iron and coal prices have increased far more and they are critical to China. The CHinese economy will continue to grow but perhaps a little slower....but it needs to. The availability of resources is a real issue...especially human resources....which is why so many Cultural Revolution Warriors have been brought out of retirement to 'run' (destroy would be a better word) university departments.

Invest in good companies, avoid private educational institutions - they will collapse in a big heap in a few years. The product they sell is very substandard

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