Bailout for top-50 listed companies considered

Shenzhen stock market
via WikipediaChina's financial authorities are considering a 800 billion Renminbi (93 billion euro) bailout plan for its top-50 listed companies, the Economic Observer discloses on Wednesday.
The plan is considered to spring into action when the stock index for the Shanghai and Shenzhen stock exchanges nears the 1,500 benchmark and is meant to buy up stock of companies in the danger zone.

According to the report, in extreme cases, the stock market might drop between 800 and 1,000 points, when rescue measures from the government would be meaningless. To effectively prevent panic selling, the government should take action if the index approached 1,500 points, it suggested.By its estimate, RMB 930 billion would be needed to buy all circulating shares if the index reached 1,500. But, it added, buying one third of the total circulation would be sufficient to bolster the market, which would cost RMB 300 to 400 billion. Based on these calculations, the report then suggested that the government establish an RMB 600 to 800-billion stabilization fund.

Today the Shanghai stock index edged up a bit to 1,859 points, but has been steadily going down since the beginning of this year, hardly bothered by both positive and negative actions by the Chinese and other governments.

Commercial
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