Why single out China for market intervention?
- By Kenneth S. Courtis
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E-mail China Daily, July 17, 2015
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The invisible hand [By Jiao Haiyang/China.org.cn] |
There has been a lot of talk recently about the Chinese government becoming involved in the country's stock market: An odd charge to level at China, to say the least. Just look at what takes place around the world. Indeed, it is in the so-called developed economies that we see the most frequent and most aggressive market intervention by governments.
The Bank of Japan is buying Exchange Traded Funds and real estate stocks on a large scale. Over the past year and a half, the BoJ has aggressively purchased the Nikkei index. These are operations that Japan's central bank has done regularly since the market implosion in 1989.
Also, the Japanese government has frequently instructed the national pension fund, the national social security fund and the postal savings fund, as well as private sector funds - such as the large insurance companies and the city banks - to do the same. The buying of ETFs and real estate stocks is part of the BoJ's quantitative easing program.
Besides, the Japanese central bank and other government investment pools are also buying into commercial real estate.
We have seen various government market operations in the Republic of Korea, Thailand, Malaysia and Singapore. Of course, 25 years ago, the Hong Kong Monetary Authority led the charge into the equity market, which speculators had pushed into a death spiral. So, as far as Asia is concerned, government intervention is neither new nor uncommon.
As for the rest of the world, one need only recall that former US secretary of the treasury Timothy Geithner, from 2009 till he resigned in 2013, never ceased to underscore that rising asset prices were a major objective of quantitative easing. While the US Federal Reserve was not directly buying equities, it was working assiduously to drive money into equity markets.
Remember also that US President Barack Obama, during a press conference in the spring of 2010, advised his fellow Americans - like Warren Buffet - that it was a good time to buy shares, emphasizing that the US government would do everything it could to support asset prices.
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