China’s stock markets are policy-driven, because the government needs its citizens to prosper; Chinese President Xi Jinping (C), gives peanuts to a child while talking with local villagers in Hunan Province (photo: dpa)

China’s stock market: hands on or hands off?

Have China’s leaders given up on their commitment to move to a more market-driven economy? You could be forgiven for thinking so, if you observed them straining every nerve to push the stock market back up over the past two months. Foreign investors may worry that the opening-up of recent years has been halted, even reversed. It is impossible to say when, or even if, the state will allow the stock market to operate independently of its control, writes GIS guest expert Ken Davies.

If you were tempted to invest in shares in emerging markets over the past year, you would have done well to choose China, especially if you sold in mid-2015. Chinese stock markets performed better than anywhe...

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 Ken Davies
Imagine the psychology of an investor facing the possibility of imprisonment for selling shares short, with half those shares no longer tradeable. Then imagine the cumulative effect of institutions with hoards of money piling into the market
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