Harness social media to aid market stability

Many people have tried to come up with an explanation for the capricious and near-mystical fluctuations in the Chinese stock market in recent weeks. But most of them seem to have missed the point.

The most convenient explanation is an economic one - about the investors' fear of an imminent tumble in GDP growth or in the financial resources at Beijing's disposal. But hardly does this square with the basic political realities in a large and diverse country under a centralized financial regime, which has ample resources to interfere with market forces. The fear cannot be justified.

Then comes the financial explanation - about the bubbling effect (or the effect of a bubble bursting) from easy money, especially easy credit, in a market where many listed companies might have difficulty delivering the results expected by their shareholders. But that doesn't seem to explain why a panicky sell-off could have happened when the real economy was by and large stable, although far from racing at full speed as in the past or why such sell-offs could have occurred repeatedly between short intervals, even after the central government's strong-handed interference.