Why single out China for market intervention?
- By Kenneth S. Courtis
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E-mail China Daily, July 17, 2015
In October 1987, the BoJ aggressively bought US index futures during Asian trading hours - in Wall Street vernacular - to position the market for the opening, following the Oct 19 "Black Friday" crash on the New York exchange.
Later, it emerged that the operation was carried out at the request of the US Federal Reserve and Treasury. The two countries had apparently struck a swap deal over the weekend, so that the Japanese had all of the US dollars they needed for the operation.
In 2007 and 2008, France's institutional investor Caisse de Dép?t, on the instructions of the élysée Palace, where the chief of staff was the former head of the French Treasury, bought the French stock market index, as well as the underlying shares, in order to support the market that was crashing.
In the summer of 2007, the Bank of Canada became the only buyer in the asset-backed securities market that had imploded and risked wiping out the pension assets of millions of people.
There are several such examples, including the UK lifeboat operation in the 1970s. One also remembers that in 2001 and 2002, several European Union equity markets simply shut down for a few days at the peak of market turmoil.
Thus, what we are seeing today in China is not exceptional. Perhaps it is being done in a clumsier manner than in some other places, but it has been a common practice across the world.
China's stock exchanges are less than 20 years old. More mature economies have simply had more experience of market crashes. As a result, their governments have developed a larger panoply of instruments to intervene in the markets and have done so with greater finesse.
Kenneth S. Courtis is chairman of Starfort Holdings and managing partner of Courtis Global & Associates.
The Globalist
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