Calling Tuesday’s 10% decline in China’s stock markets a long overdue correction, most fund managers maintained their faith that the market will rebound due to a number of positive factors, Reuters reports. China’s market continues to boom, regulators continue to impose reforms and investors have a great deal of cash on the sidelines that they are anxious to invest, fund managers said.
“It is more of a reality check. Things have run up far too quickly,” said Bratin Sanyal, head of Asian equity investments for ING Investment Management. “In the medium to long term, is the market going to do well? Yes. Is it going to remain an important market for investors? Yes. Will people remain interested in China? Yes.”
As far as the stability of China’s economy is concerned, the government just raised bank’s required reserves, and the amount it represents ($20.7 billion) is more than China’s $16 billion trade surplus, noted Yu Rongquan, chief investment officer of Fortune SGAM Fund Management, a joint venture between China’s Fortune Trust & Investment and Societe Generale.
“So from this point of view, plus further improvement in the quality of listed firms with the listing of more blue-chip companies and more asset injections, there should be no problem for the stock market in the medium term,” Yu said.