Have confidence in China stocks, regulator says

Investors should have faith in China's sliding stock market because the economy remains strong and the quality of listed companies has improved, a senior securities regulator said.

His comments, contained in a front-page report in Friday's official Shanghai Securities News and in other official media, appeared to be an attempt by authorities to ease the panic selling that has gripped the market this week.

Fan Fuchun, vice chairman of the China Securities Regulatory Commission, told the newspaper that as a regulator, he could not commment on specific market levels.

But he said that with China's economy expected to grow about 8 percent this year and consumer price inflation likely to be limited to around 4.8 percent, the environment for the stock market was positive.

Corporate profits have been growing, regulatory oversight has improved and the Chinese capital markets are currently enjoying one of the most orderly periods that they have seen, he added.

The Shanghai Composite Index <.SSEC> tumbled 2.4 percent on Thursday to close below 4,000 points for the first time in seven months, bringing its losses this month to 9 percent, including a drop of 7.7 percent so far this week.

The index is down 35 percent from October's record high, hit by concern about the U.S. economic slowdown, surging Chinese inflation and the market's ability to absorb big supplies of fresh equity.

Asked about the index's drop below 4,000 points, Fan said the issue was complicated because the market moved in response to many factors. He did not promise any fresh, specific steps by authorities to aid the market.

($1 = 7.1 yuan)