China's central bank chief: stock market valuations not in line with China's economic fundamentals

China's stock market has reportedly lost $3 trillion in market capitalization in the last six months and at the current level of 2,548 points, the Shanghai Composite index is down more than 50 percent from the 2015 high of 5,166.

The sell-off could be the result of the worsening economic picture, although the head of China's central bank (PBOC) believes that the recent stock market fluctuations are largely due to investor sentiment and expectations.

Key quotes (Source: Reuters)

Recent stock market fluctuations largely due to investor sentiment, expectations

China's economic fundamentals are good, macro leverage levels stabilizing

Current stock market valuations are at a relatively low level

Stock market valuations not in line with China's economic fundamentals

Cbank studying targeted measures to help financing problems of companies

Will push forward plans to support private firms' bonds financing

Will push forward support plans for private firms' equity financing

Will support commercial banks to expand credit to private firms

Will continue with prudent, neutral monetary policy

Will keep liquidity reasonably stable

Will use monetary policy tools including MLF to boost lending to private firms