After the selloff yesterday regulators in China decided that more intervention was needed to keep the market at recent levels. Injecting about $20bln into money markets and buying stocks in the market, China has again added to the uncertainty of where true valuation lies in their stock market. The resumption of the ban on selling looks like it will remain past the Jan 8th deadline as well.
This intervention just adds to uncertainty in exchange for short term relief in the markets, and almost guarantees the level of skepticism and market volatility out of China as seen in August. In the coming days questions about currency valuations and freezing of stock trading will some back into question. Longer term this will just make it harder to get outside investment into the market. By intervening the country is again linking the real economy with the stock market which is a dangerous relationship since the markets are driven by perceptions of value.
It will be interesting to watch how the difficult process of unwinding these measures will take place in the coming months and will no doubt be a global market moving event for some time.