Michael Pettis submits: The stock markets here are being buffeted around by rumors of futures trading on local stock indices. Wednesday Fan Fuchun, Vice President of the CSRC, gave a speech at a forum in Shanghai in which he seemed to imply that everything was ready for a launch of a futures market on the main Shanghai index. That set off rumors about an imminent approval.
Although previously there were fears that index futures would cause the market to crash, the rumors actually drove the market up 2.5% Wednesday. Thursday, it seems that the rumors were quashed. According to an email from my student Shang Ning:
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