China Crisis was the name of a soft rock band in the eighties and the time might be right for a revival.
Despite Greece and Chancellor George Osborne competing for coverage, the volatile behaviour of the Chinese stock market is arguably the top story of the week.
After the effectiveness of new measures introduced at the weekend to shore up the stock market fizzled out after just one day, the regulators upped the ante and today the Shanghai Composite index notched up its biggest single-day percentage gain since 2009.
The index is still down by more than 30% since the middle of last month, however, and it fell 8.2% yesterday, prompting the authorities to ban any party that owns more than 5% of a company’s stock from selling that company’s shares any time in the next six months.
Beijing has also loosened up lending rules in the hope that people will borrow money so they can pump it into the stock market.
That would seem a counter-intuitive investment strategy in most stock markets – borrowing money so you can catch a falling knife – but they do things differently in China, and the government is certainly pulling out all the stops to stop markets doing what markets are supposed to do.
Around half of all companies have voluntarily suspended trading in their shares, which is another dodge many Western companies would like to adopt.
Closer to home, the post-match analysis of yesterday’s Budget from George Osborne is to the fore in the broadsheets.
“George Osborne slashes welfare but gives Britain a pay rise” is the Telegraph’s view, while The Scotsman reckons Osborne “shamelessly stole Labour’s clothes” in yesterday’s speech, which will surprise those who were unaware Labour still had any garments to purloin.
The FT, meanwhile, observes that Osborne has been accused of an insurance stealth tax. Gordon Brown, when he was chancellor, was the master at slipping in stealth tax rises to pay for headline-grabbing cuts in the basic tax rate until the newspapers got wise to him; this may be another example of Osborne stealing Labour’s clothes and it will be interesting to see whether predominantly pro-Tory Fleet Street takes him to task for it in the same way it did Brown.
One of the most bizarre questions is posed by the Spectator magazine: what does George Osborne have against the fertile, it asks, in response to the chancellor’ decision to limit state support to the first two children born to a couple.
The restrictions are not due to come in until 2017 so there is no need to leap into the cold shower yet, is the Spectator’s advice, which seems to overlook the fact that children have the annoying habit of remaining dependents for a long time.
On the company news front, house builder Barratt Developments (LON:BDEV) is on the up after it raised profits guidance.
Primark owner Associated British Foods (LON:ABF) can’t match that, but reassurance that full-year results will be in line with expectations has, in fact, been enough to see the shares outperform Barratt’s in the morning trading session.
Elsewhere on the high street, off licence operator Conviviality Retail (LON:CVR) has asked for trading in its shares to be suspended – and it is not even a Chinese company – after it confirmed it is in bid talks with privately-owned drinks distributor Matthew Clark.
If Matthew Clark does become part of the Bargain Booze group it would constitute a reverse takeover under AIM’s rules.
Conviviality Retail has only been listed since 31 July 2013; it floated at 100p and the shares were quoted at 155p before trading was suspended.
Finally, Kurdistan-focused oil producer Gulf Keystone Petroleum (LON:GKP) retains the ability to enthuse small cap investors.
Its operational update this morning ahead of the company’s annual general meeting has been well-received, with the company confirming it continues to produce at stable rates from both of its Shaikan facilities.