There’s One Metric That Can Stabilize China's Markets

Just a few weeks ago, optimism was palpable in the heart of Shanghai’s financial district. UBS Group AG’s annual China conference enjoyed a record turnout and investors from abroad were enthusiastically buying mainland shares — so much so that some hit foreign-ownership limits.

Now all anyone can think about is the number of coronavirus cases. The Shanghai Composite Index slid 8.7% lower Monday, its first trading day since the extended Lunar New Year holiday. That’s the steepest drop since China’s market meltdown of 2015. Within minutes, the People’s Bank of China injected a net 150 billion yuan ($21 billion) of liquidity — its largest single-day operation since 2004 — and lowered the money-market policy rate by 10 basis points. The securities regulator told brokers not to issue margin calls or sell stocks at their proprietary-trading desks.