Schlosstein Says Everyone on Auto-Dial to Sell at China's Reopen

What Should Investors Read Into China's PBOC Decisions?
  • Evercore CEO says Chinese circuit breaker is too restrictive
  • Lack of confidence in China's data harms investment, CEO says

Investors will line up to sell stock when China’s market reopens Friday, Evercore Partners Inc. Chief Executive Officer Ralph Schlosstein said.

“This is going to be everyone on auto-dial to sell their stock,” Schlosstein said Thursday in an interview on Bloomberg Television. “That’s not a good thing.”

Chinese stocks tumbled 7 percent Thursday, triggering a full-day trading halt less than 30 minutes into the session, after the central bank cut its yuan reference rate by the most since August. Schlosstein said the 7 percent shut-down trigger is worsening the situation for Chinese authorities.

“It’s confidence-sapping when a market is closed,” he said. “I would actually advise them to have a less restrictive or wider circuit breaker and see if the market can actually find its bottom.”

Also hurting demand for Chinese shares is a “lack of transparency and confidence in the data and in the integrity of the reporting of that data,” he said.

An end to the sell-off might emerge as investors refocus on macroeconomic strength in the global economy, according to the CEO of Evercore, a New York-based investment bank.

Global Growth

“The greatest reassurance will come not from the markets but from the real economy,” Schlosstein said. “We still have, not storming, but acceptable growth rates in the United States, we have some growth in Europe, we have some growth in Japan and we have an uncertain but positive growth in China.”

Separately, Schlosstein said Morgan Stanley’s announcement Wednesday that Colm Kelleher was named president of the firm probably signals that directors were demanding a clearer plan for who will succeed CEO James Gorman.

“The Morgan Stanley board, probably correctly, has asked James to have a more clear succession plan,” Schlosstein said, adding that the move frees up Gorman to focus more on the strategic future of the firm.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE