Stock market moves will not shake Beijing's resolve

Significance

Beijing's supportive policies are likely to stabilise the market, and structural tailwinds will probably reflate it eventually. Stock market volatility is likely to have limited ramifications for the wider economy unless it is prolonged.

Impacts

• Downward pressure will last until margin traders have unwound their positions, a mechanical process over which Beijing has little control.
• Foreign-listed Chinese firms may reconsider plans to de-list abroad and re-list in China.
• Capital account and currency liberalisation will resume, in pursuit of Beijing's goal of achieving IMF reserve currency status.