Pension plan shows confidence in stock market?

The coincidence of a dreadful drop in Chinese shares and the release of a draft guideline on Monday signaling China's pension fund will be allowed to invest in the stock market does not necessarily mean that policymakers are desperate to boost the market as many retail investors might believe.

However, since the urgency to stabilize the domestic stock market allows no ambiguity in government signals, Chinese policymakers should pay attention to the timing of such signals.

In spite of the central bank's efforts on Saturday to cut both the requirement reserve ratio and key interest rates, the ailing Chinese stock market showed no signs of recovery, with the benchmark Shanghai composite index experiencing a rollercoaster 10.07 percent volatility on Monday.