Chinese stocks tumbled again yesterday, taking the week’s losses to more than 10 percent,as the securities regulator said it was investigating suspected market manipulation and announced a slew of measures aimed at heading off a full-blown crash.
After a slump of nearly 30 percent in Chinese stocks since the middle of last month, the China Securities Regulatory Commission (CRSC) has set up a team to look at “clues of illegal manipulation across markets.”
After market close, a commission spokesman said China would cut initial public offerings and capital raisings, and support long-term investors entering the market to help stabilize prices.
It also said China’s official margin lender for brokerages, which makes loans available for stock market investment, would boost its capital base to 100 billion yuan (US$16.11 billion) from 24 billion yuan to expand its business.
A flurry of policy moves over the past week, including an interest rate cut and a relaxation of margin lending rules, had failed to arrest the sell-off.
The People’s Bank of China (PBOC) also rolled over 250 billion yuan of medium-term loans to banks late yesterday to ensure adequate liquidity in the system.
The CSI300 index of the largest listed companies in Shanghai and Shenzhen dropped 5.4 percent to close at 3,885.92, while the Shanghai Composite Index shed 5.8 percent to 3,686.92 points.
Hong Kong’s Hang Seng Index fell 0.8 percent to 26,064.11.
For the week, the CSI300 lost 10.4 percent and the Shanghai Composite Index fell 12.1 percent.
Chinese stocks had more than doubled between November last year and the middle of last month, fueled largely by retail investors using borrowed money.
XinjiangSources with direct knowledge told reporters that the China Financial Futures Exchange (CFFEX) had suspended 19 accounts from short-selling for a month.
After market close, CFFEX said it was introducing transaction fees on futures contracts on three indices and strengthening the market to combat short-selling activities.
Guotai Junan Securities (國泰君安證券), one of China’s top brokerages, said it would suspend lending securities to clients for short-selling and step up monitoring of abnormal trading behavior by short sellers.
Beijing has been struggling since the weekend to find a policy formula to restore confidence in its stock markets.
So far, rapid-fire steps including easing monetary policy, encouraging more pension funds to invest in stocks and cutting transaction costs have failed to stem the slump.
The CSRC has relaxed rules on using borrowed money to speculate on stocks, letting brokerages set their own tolerance level on margin calls and allowing the rollover of margin lending contracts.
The regulator yesterday said it would step up its monitoring of markets to protect investors against the mis-selling of investment products.
China releases second-quarter GDP data on July 15, and many economists expect growth to dip below 7 percent, which would be the weakest performance since the global financial crisis.
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