Is the government going to help the stock exchange?

DrOMM via Flickr The Shanghai stock exchange has been reaching new lows on an almost weekly basis over the past six months. nearing now the 2,000 index benchmark. That dramatic drop has become so boring that the index as all but disappeared from my radar screen. When the returns went up continuously that was as boring, but at least you could make some money.
My expertise on the market is pretty limited. I moved out of it at the beginning of the year, did not really return and that failure to make a decision proved to be a pretty smart one, since I avoided the downturn, unlike many of my Shanghainese friends.
Now, media are reporting on a short rebound, triggered off by the rumor the central government is planning fiscal incentives to revive the market, indicating a possible return. According to my observation that is a nice way of making a nice one-day gain, but does not really indicate a change.
Unlike what many Chinese investors hoped for, the government seems very unlikely to intervene, even though a recovering stock market would reduce some financial problems among its citizens. Rember the first half decade of this century? Then the stock market dropped for five years, and the government let it go.
Having a hands-off approach is much more important for the central authorities than trying to revive the markets with some short-term financial patch work. The stock market will not see any intervention from the government at this stage.

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