Well known economist and sociologist, He Qinglian, who blogs regularly on Voice of America, looked into the theory that has been widely circulated in China that a foreign conspiracy accounted for the crash in China’s stock market causing Beijing to roll out a slew of support measures to stem the stock market slide.
In her July 5 blog, He Qinglian noted that, over the past year, the total market capitalization of publicly traded companies in the Shanghai and Shenzhen stock exchanges has grow by US$6.7 trillion to US$10.05 trillion, far exceeding that of the Japanese stock market at around US$5.0 trillion.
One critical step in Beijing’s game plan is to overtake the US equity market cap of US$25 trillion and to have its A shares included in MSCI’s Emerging Market Index (an index created by Morgan Stanley Capital International). US$1.7 trillion in funds worldwide track this index. According to MSCI’s estimate, a decision to include domestic Chinese stocks in the index would have injected an estimated US$400 billion of funds from asset managers, pension funds, and insurers into mainland China’s equity markets over time.
On the evening of June 9, 2015, MSCI decided against including mainland China’s equity in the gigantic MSCI Emerging Markets Index, citing a number of regulatory matters it has yet to iron out with Chinese securities agencies.
When refuting speculation that foreign institutions were accountable for the crash of China’s stock market, the author questioned Beijing’s confidence and ability in managing the economy through artificially propelling a bull market, attracting foreign investors to fuel its growth, and counting on Chinese investors’ patriotism to reverse the stock market plunge.
Source: Voice of America, July 5, 2015