Page 10 - ARUBA BANK SEPT 5,2015
P. 10
BUSINESS A25
Saturday 5 September 2015
China’s stock rescue plan jolts companies, reform plans
JOE McDONALD ing shares to prop up prices An elderly Chinese man walks past display boards showing the latest stock prices at a brokerage
AP Business Writer has yet to announce what in Beijing. Beijing’s scramble to put a floor under free-falling share prices came at a cost China
BEIJING (AP) — Tonhe Elec- it bought or how much it has yet to tally.
tronics is a casualty of Bei- spent. In a report last month,
jing’s frantic effort to stop a Goldman Sachs estimated (AP Photo/Ng Han Guan)
stock market bust. that group, dubbed the
The maker of electrical “National Team” by finan- billion). The industries af- Ltd. In Shenyang, the big- market fall, July’s growth in
equipment, part of a tech- cial analysts, spent 860-900 fected play a leading role gest city in the rust-belt retail spending held steady
nology industry the ruling billion yuan ($135-$140 bil- in the ruling party’s plans northeast, wanted 620 mil- at June’s 10.5 percent rate.
Communist Party wants to lion) in June and July. to transform China from a lion yuan ($99 million) to ex- Wang Pinyue, a piano
promote, hoped to raise That led to state -owned low-wage factory into a pand production and sales teacher in the northeast-
200 million yuan ($32 mil- companies amassing a creator of technology and of baked goods. ern city of Harbin, said he
lion) from an initial public mountain of shares in other consumer brands with high- Regulators have begun al- lost 75 to 80 percent of the
offering of stock to build government enterprises, er-paying jobs and environ- lowing companies that al- 5,000 yuan ($800) he invest-
a research and develop- many bought from private mentally friendly growth. ready are traded to raise ed. Even though that was
ment center. investors. That reversed Thinker Automation Ltd., a money through sales of equal to half of last year’s
Then share prices collapsed an official campaign to maker of control systems additional shares but there income, Wang said it hasn’t
and Beijing canceled stock encourage the public to for railways and other in- has been no word on when affected his spending.
sales by Tonhe and more buy shares in hopes “di- dustries in the central prov- IPOs might resume. “But if I had invested more
than two dozen other com- verse ownership” of state ince of Henan, planned to Analysts saw no “wealth and lost more, I sure would
panies as part of its desper- companies will prod them raise 1.3 billion yuan ($205 effect” or uptick in con- be in a bad mood and short
ate effort to stem the slide. to become competitive million) to expand opera- sumer spending when the of money. I might cancel
Now the company in the and efficient.“The state, tions. market index more than a trip or something,” said
central city of Shijiazhuang through its rescue, has fur- Many are in areas away doubled in value between Wang, 26.
is in limbo. ther increased its owner- from the prosperous east November and June. They One reason for the limited
“We have no other fund- ship of the stock market,” coast where communist said that should mean little effect is the nascent popu-
raising plans,” said a Tonhe said economist Julian Ev- leaders are eager to spur change as share prices larity of investing among
investor relations repre- ans-Pritchard of Capital development. Toly Bread sagged. After the first major China’s public.q
sentative who would give Economics. “They have
only her surname, Zhuang. gone directly against their
“What we can do now is longer-term reform goals.”
just wait for the notice to The collapse that saw
get the IPO started again.” China’s main stock in-
Beijing’s scramble to put dex plunge 30 percent
a floor under free-falling after hitting a peak June
share prices came at a 12 prompted ruling party
cost China has yet to tally. leaders under President Xi
The boom and bust passed Jinping to set aside repeat-
so fast it had little impact ed pledges to give market
on consumer spending. But forces a bigger role in the
on top of the public money economy.
plowed into buying shares, Regulators canceled IPOs
the intervention disrupted planned by 28 private
fundraising for small com- companies in electron-
panies and set back efforts ics, food processing and
to make the stock market a other industries. The 21 that
tool for economic reform. had disclosed details were
State agencies and com- planning to raise a total of
panies charged with buy- about 8.8 billion yuan ($1.4
Central banks falling short of 2 percent inflation target
President of European Central Bank Mario Draghi speaks during that prices surge out of He said that lowering the in more than three years.
a news conference in Frankfurt, Germany. control. Both central banks ECB’s 2 percent inflation The major central banks’
are consistently failing. target would represent an historically low interest
(AP Photo/Michael Probst) And so the question has admission of failure that rates and mass bond pur-
arisen of whether the Fed could damage the central chases have failed to off-
JOSH BOAK tral Bank have been striving and the ECB should rec- bank’s authority. set the pressures of lower
AP Economics Writer to generate a small dose ognize that 2 percent infla- “It will test our credibility if energy prices and tepid
WASHINGTON (AP) — Is 2 of inflation — around 2 per- tion in a global economy we were to change our tar- consumer demand. When
percent inflation too high cent annually, just enough awash in cheap oil, avail- get, when it’s taking more the Fed ends its next policy
to reach? The Federal Re- to spur more spending and able workers and money- effort to achieve that tar- meeting on Sept. 17, it will
serve and European Cen- income but not so much saving technologies might get,” he said. announce whether it’s rais-
be too ambitious and In the 19 European coun- ing U.S. interest rates after
should lower their targets. tries that share the euro nearly seven years of re-
ECB President Mario Draghi currency, annual inflation cord lows. In calculating
faced that very question at is a scant 0.2 percent. In that decision, the Fed must
a news conference Thurs- the United States, the Fed’s weigh its confidence that
day in Frankfurt, Germany. preferred inflation measure inflation will return eventu-
Draghi was having none of is 0.3 percent. U.S. inflation ally to 2 percent — one of
it, at least publicly. hasn’t breached 2 percent its mandates. q
