“Fidelity Investments, which oversees the largest China funds outside of the mainland, is joining Goldman Sachs Group Inc. in saying that Chinese stocks are a buy following the worst selloff in two decades.” (Bloomberg) Our view? There have been some big short positions in China’s stock markets, including from some US hedge funds. Needless to say, Chinese officials love to squeeze shorts, particularly when they are held by foreigners in their markets. Rule # 1 in China’s managed stock markets: Do not fight Chinese officials when they are actively in the market.
From the New York Times: “From a Western market perspective, what China is trying to do cuts against everything we know that will work. But they don’t see this the way we do. People in the Western democracies tolerate volatility. But the failure of equity markets in China could translate into social unrest, which is a horrifying prospect for the Chinese leadership.” http://www.nytimes.com/2015/07/10/business/international/...
Surely this market has lost credibility? It's like markets are so used to central bank intervention it is viewed and received as par for the course.