Beijing Booboo

With half of Chinese-listed companies having suspended trading, with short selling prohibited, the Chinese Central Bank giving money to firms to buy shares, and the government relaxing rules on mortgage borrowing to encourage stock purchases, it’s clear the Communist Party is panicking. But controlling markets is a fool’s errand, and if equities stay overpriced, these interventions, at a minimum, misallocate capital that could be better invested elsewhere, thus stunting growth.