China's securities regulator issued a second public warning within two weeks on risks involved in the country's soaring stock market, state media reported yesterday, while former US Federal Reserve chairman Alan Greenspan warned China's red-hot stock market was heading for a steep correction.
China's stock watchdog urged securities companies to do more to tell their clients about risks and root out any rule violations in their brokerage operations, the China Securities Journal and other official newspapers said.
The China Securities Regulatory Commission issued a similar notice on May 11, vowing to intensify a crackdown on growing insider trading and stock price manipulation while calling for greater public awareness of stock market risks.
The stock watchdog also told brokerages to help investors fully realize the principle that "buyers have to undertake risks on their own" and use caution on stock investment.
The regulator has fined a former company manager 200,000 yuan (US$26,000) for insider trading in an effort to crack down on irregularities in the booming stock market.
Chen Jianliang, former deputy general manager of Shenzhen-listed Xinjiang Tianshan Cement was also barred from senior management positions in any listed or securities company for five years, the stock watchdog said.
Asian stocks fell yesterday after Greenspan told a meeting in Madrid via teleconference that he feared a "dramatic contraction" in Chinese stocks, adding that their recent boom was "clearly unsustainable."
The remarks by the former Fed chief -- who famously warned investors against "irrational exuberance" more than three years before the dotcom bubble finally burst -- added to fears a sharp correction in Chinese shares could spill over into other markets.
Chinese share prices closed 0.54 percent lower yesterday on continued heavy turnover.
The benchmark Shanghai Composite Index, which covers both A and B-shares listed on the Shanghai Stock Exchange, was down 22.58 points at 4,151.13 after trading between 4,089.39 and 4,208.39. Turnover was 251.63 billion yuan (US$32.68 billion).
Analysts said the increased turnover showed that investors started to sell after the market regulator repeated a warning about market risks. The market is unlikely to see sharp gains amid increasing government concerns in the short term, they added.
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