China makes long-term commitment to stabilise stocks

China's market regulator on Friday made a long-term commitment to stabilising the volatile stock market for a "number of years", in what analysts said was an attempt to boost weak investor sentiment. The China Securities Regulatory Commission (CSRC) said the state-backed China Securities Finance Corp. (CSF), which is tasked with buying shares on behalf of the government, will have an enduring role. "For a number of years to come, the China Securities Finance Corp. will not exit (the market). Its function to stabilise the market will not change," the CSRC said in a statement on its official microblog. The CSF has played a crucial role in Beijing's stock market rescue, which was launched after Shanghai's benchmark crashed 30 percent in three weeks from mid-June. Authorities gave the CSF huge funding to buy shares and subsequent speculation the government was preparing to withdraw from the stock market has spooked investors. The regulator's comments were the first time it has given any indication of how long it would intervene to support equities. Analysts said the CSRC was looking to shore up sentiment, even at a time when the market is stabilising. "Although the strength of market-saving measures by government bodies is gradually decreasing, in order to keep investors' confidence in the market and prevent dramatic volatility, the CSF is showing that it will step in when it’s necessary,” Phillip Securities analyst Chen Xingyu told AFP. The CSRC statement added the CSF would only enter the market during times of volatility. "When the market drastically fluctuates and may trigger systemic risk, it will continue to play a role to stabilise the market in many ways," said the statement, which quoted CSRC spokesman Deng Ge. CSF has transferred some of its stock to state-owned investment company Central Huijin Investment Ltd. to be held long-term, it said, but gave no further details. Other government moves to prop up shares have included barring "big" investors from selling their stakes and cracking down on short-selling -- a bet prices will go lower. Shanghai stocks closed up 0.27 percent on Friday, capping their biggest weekly gain in two months as investors bet a surprise devaluation of the Chinese currency this week augured more measures from Beijing to boost sagging economic growth. But the Shanghai index is still down more than 20 percent from its June peak.