Beijing calls for more efforts to stabilise stock market after renewed sell-off

China’s State Council has vowed to implement stronger policy measures to stabilize the nation's stock market, following another decline in shares on Friday, which mirrored a market downturn in the United States. At a state council executive meeting chaired by Premier Li Qiang, officials emphasized their commitment to bolstering the market's stability and promoting steady, healthy growth in the capital market.

The Country's Stock Index, which tracks major Chinese firms listed on the Shanghai and Shenzhen exchanges, dropped by 1.4 percent on Friday, following the steep market crash in the United States. Among the affected sectors, technology stocks suffered the most significant losses, with the Star 50 gauge plummeting by 2.6 percent due to heavy exposure to AI chipmakers trading in Shanghai.

The recent decline in Chinese stocks followed a similar slide in the US markets, triggered by a panic selling spree targeting technology companies. The sell-off resulted in the loss of over US$2 trillion in value, as investors feared that a Democratic-controlled Congress might hinder the rapid expansion of the artificial intelligence industry.

This sell-off put an end to a two-day rally in Chinese stocks that began on Wednesday, following Beijing's announcement of a rescue package intended to stabilize the markets in the wake of weeks of dwindling investor confidence.

In October, China experienced its worst monthly stock market sell-off in a decade, and major mainland indices have persistently underperformed their global counterparts this year. The Shanghai Composite Index has declined by more than 9 percent year-to-date, while the Shenzhen Component Index has fallen by over 19 percent. After a joint meeting of Chinese regulators earlier this week, Beijing unveiled a series of measures to support the markets, including a reduction in the lending rate for share buy-back loans, a fresh round of swap facilities exceeding 100 billion yuan, and a commitment to consider easing margin requirements.

During the State Council meeting on Friday, officials also deliberated on other policy areas, such as infrastructure investment, equipment upgrades, workforce support, and local government debt management. They pledged to expedite major projects and the "six networks" infrastructure drive, bolster corporate investments in equipment and intangible assets, and ensure timely and full payments to local governments and businesses.

Furthermore, they called for enhanced support for college graduates from low-income households or urban households without employed members, a more robust social safety net, and ongoing efforts to mitigate risks, including those stemming from local government debt.