economy - No pain, no gain at the stockmarket

A third day of falling share prices at the stock markets in China after the regulatory body started to sell off the non-tradable shares in state-owned companies on Monday. Consensus seems to be growing among experts that this excercise is really needed to improve the long-term performance of the stock markets.
In the Financial Times of today:

"It will be a case of short-term pain, long-term gain," said Stephen Green, an economist at Standard Chartered in Shanghai. "If you are going to try and address this issue, then they are going about it the right way." It was highly unlikely there would be a sustained drop in the market as a result of the share-sale programme, he said.
Zhao Danyang, a fund manager at Guotai Junan Asset Management in Shenzhen, said the trial reform was a long-term positive for the stock market. "But the corporate governance structure can't be improved overnight. It takes time."

Some measures have been taken to mitigate the pain. New IPO's will be most likely halted for the months to come and one of the four first companies to list their two-third non-tradable shares offered compensation to its current shareholders for possible losses.

Stephen Green on the stock market