The Business Times
November 10, 2008
China think tank proposes stock fund
(BEIJING) China's top think tank has proposed creating a fund of 600-800 billion yuan (S$130-174 billion) to buy shares of 50 state-owned companies if stocks dip below a key threshold, a newspaper reported on Saturday.
The proposal made in a report by the international finance research centre under the Chinese Academy of Social Sciences, has been submitted to 'high level' government officials, according to the Economic Observer newspaper.
The report suggested that the fund purchase shares if China's benchmark Shanghai Composite Index dropped below 1,500 points, in order 'to show the determination and confidence of the government in stabilising the stock market'. China's main stock index has fallen more than 70 per cent since its October 2007 peak, but last week rose for the first time in five weeks, finishing at 1,747.713 on Friday, amid speculation about possible government measures to boost the market.
The report proposed the stock stabilisation fund be capitalised out of the foreign exchange reserve fund or from the issuance of special government bonds. It suggested letting the China Investment Corp (CIC), the China Securities Regulatory Commission (CSRC) and the Social Security Fund jointly operate and manage the funds.
The idea of a stock stabilisation fund has been around for some time as the stock market has continued its steady slide. -- Reuters
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