June 27, 2015

"The government wants to steer money toward state-run companies, which tend to trade at lower valuations."

Bloomberg Rising up from the center of Beijing, not far from the Temple of Heaven, is the loudest voice in the wild east of the Chinese stock market.

'It’s neither a bank nor a brokerage -- it’s the headquarters of Xinhua News Agency, long considered the “throat and tongue” of the Chinese government. With the heady exuberance over Chinese stocks starting to fade, sowing fears of worse to come, investors are scouring state media for clues to the Communist Party’s thinking.

'Only months ago, encouraging words from Xinhua sent stocks soaring. Now, with markets sinking, that official line has gone quiet, leaving many wondering how -- or whether -- Beijing might respond.
Just how much China’s state media are used to telegraph government views on the markets is the subject of debate. Xinhua, founded in 1931 as the Red China News Agency, didn’t answer calls to its news hotline seeking comment.

'But analysts agree that Xinhua, a ministry-level government department, is too powerful to ignore. If nothing else, reports and commentary by state media sway investor psychology and can turn a rout into a rally -- or vice versa.

'“Investing in China stocks means you have to follow state media,” said Nelson Yan, the chief investment officer at the Hong Kong unit of Changjiang Securities Co. Government policy, after all, has been largely behind the world-beating 124 percent market gain of the past 12 months.'

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