Former China regulator exposes shocking truth about market targets: It’s all in your head! 🤯📉

Unraveling the Mystery Behind China’s Stock Markets and Currency Exchange

Delve into the secretive realm of Chinese financial policymaking with insights from a former senior regulator. Xiao Gang, former head of the China Securities Regulatory Commission, recently revealed shocking details about how top Beijing leaders influence market dynamics.

Here are the key revelations from Xiao Gang’s seminar at the PBC School of Finance at Tsinghua University:

• Psychological Targets: Xiao disclosed that top leaders set "psychological" targets for the nation’s stock markets and currency exchange rates, irrespective of fundamentals. While these targets are not officially mandated, crossing certain thresholds triggers unease among senior officials.
• Market Goals: China’s leadership harbors unspoken "goals" for market performance. Surprisingly, falling below the 3,000-point mark on the Shanghai Composite index emerges as a red flag. Xiao emphasized that this goal lacks scientific proof but holds immense significance in the leadership’s eyes.
• Renminbi Exchange Rate: A weakening renminbi beyond Rmb7 to the dollar used to alarm the leadership. However, when the feared scenario unfolded, the markets remained relatively stable. China views the exchange rate as crucial for its trading partner image and economic stability.
• Market Interventions: The government employs a "national team" to bolster stock markets during downturns. Xiao clarified that interventions occur at specific low points, such as 2,600, 2,700, or 2,800 points on the Shanghai Composite Index.

In a surprising twist, Xiao Gang’s candid comments stirred controversy, with some experts criticizing the potential repercussions of his disclosures. Nonetheless, these insights shed light on the intricate mechanisms driving Chinese financial policy.

As China continues its tight grip on the financial system, understanding the covert tactics shaping market movements becomes imperative for investors and policymakers alike. Embracing transparency in financial decision-making could pave the way for a more stable and resilient market ecosystem in the future.