China's central bank talks up stocks and currency stability to world worried by market turmoil

Mainland policymakers' efforts to reassure the G20 over the stability of stocks and the yuan currency have been interpreted by some investors as a signal Beijing is ready to step away from propping up markets.

Top officials of the People's Bank of China held face-to-face meetings on Friday with G20 finance ministers and central bankers for the first time since a stock market collapse and a revaluation of the yuan sent shockwaves through world markets.

"The more the government tries to support the market, the more the market gets uneasy. Fund managers are scared and have actually been seen to sell down positions ahead of moves. If the government can step out at this point, the market will actually go up," said Aaron Boesky, chief executive of Marco Polo Pure Asset Management.

Rate cuts for the first time in half a decade had fuelled a bull market in mainland shares, with borrowing from margin financing significantly increasing over April and May. As margin positions unwound in June and July, the central government stepped in to prevent liquidity in the banking system drying up.

PBOC governor Zhou Xiaochuan explained to Japanese finance ministry officials that the bursting of the stock bubble is complete, while deputy governor Yi Gang told the conference: "I am confident that the renminbi exchange rate will be more or less stable around the equilibrium level", according to Bloomberg.

"Government intervention should stop at this point, Boesky said. "There is a lot of resistance from brokers and managers; people are getting resentful about the rescue."