By You Nuo (China Daily)
Updated: 2008-04-07 07:02

People say Chinese children are much too pampered. So are our stock market investors.

As the stock index continued to hover under 3,500 points for a second week, disappointed investors who had bought shares when the index was above 6,000 points, about six month ago, are urging the government to intervene to boost the market.

Rumors also abound that some companies, usually State-owned industrial giants, are enjoying protection from the embarrassment of seeing their share prices fall below their initial public offering (IPO) prices.

It is believed that this is due to secret deals between these companies and their "friendly" fund managers.

If this is true, it would be a glaring example of manipulation of the market. Executives of State-owned corporations should not be so naive as to use the stock market to "save face" when they cannot meet the expectations of investors. If they are guilty of this, they are opening themselves to investigation and a greater loss of face.

The more nave, however, are the investors. Why do they continue to think that whenever they lose money, the government will be there to bail them out.

Government intervention in a stock market is serious. Unless a country's financial system is being attacked by outside forces, there is no reason to launch a rescue mission as some investors are calling for.

The regulators should be bold enough to say no. But they have not, for the obvious reason they do not want to disappoint the investors. It is like a doting mother hearing her child crying for more candy, unable to say no for fear of hurting her child's feelings, it gets what it wants and this in time becomes a habit.

This is a very unhealthy relationship. It is not good for the family. Nor is it good to have this on a national scale.

One reason Chinese investors yearn so much for the government's protection is probably they have in the past seen some government attempts to interfere in the market.

Of course, not all results of government interference have been negative. People may argue that the Chinese stock market itself is a creation of the government.

A regulatory reform announced recently in the United States is also a government initiative.

Although government initiatives are needed from time to time, Chinese regulators should at least tell investors, particularly the individuals, that it is about time they began to take care of their gains and losses.

As regulators, they should demonstrate a sense of justice by showing no bias toward the large State-owned corporations. It is not their responsibility, nor the stock market's to help them save face.

It is not incumbent on the regulators to raise the general index whenever the market goes through a correction. It only makes investors keep crying for all kinds of bizarre bail out packages.

Lao Tzu, a Chinese sage of some 2,500 years ago, said that the greatest kind of benevolence never comes as a special favor. Economic regulators and stock market investors should take heed of the saying.

E-mail: younuo@chinadaily.com.cn

(China Daily 04/07/2008 page4)