China’s stock watchdog: No negative comments allowed

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A good reminder of how ‘free’ markets work in China:

With the Olympic Games looming, China’s equivalent of the U.S. Securities and Exchange Commission has warned domestic money managers against any public statements that might be construed as negative toward the already deeply depressed stock market, reports Don Straszheim, a China expert at Roth Capital Partners in Newport Beach.

‘Fund company executives, fund managers and other important staff should be very careful about their speeches and blog content which may cause market fluctuations,’ the China Securities Regulatory Commission advised.

‘Stability is the top priority of the regulator and everything that the regulator does is just for the sake of a harmonious and successful Olympic Games,’ it said.

Presumably, upbeat comments are still allowed. The market could use some: The Shanghai composite stock index, at 2,850.31 on Tuesday, is down 53% from its record high reached in October, although it has inched up 7.5% from the 16-month low it hit July 1.

The Chinese might like to think they’re in control, but remember the talk last fall that the government would never allow a bear market to unfold before the Games?

Maybe they’ll have better luck controlling the air in Beijing.