The ban applies to “big” shareholders – defined as those with stakes of more than 5% – company directors, board supervisors and senior executives, the China Securities Regulatory Commission (CSRC) said.
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The Shanghai composite lost another 5.9 per cent Wednesday and is now down more than 30 per cent since peaking June 12.
Among the latest intervention measures, the central People’s Bank of China said on Thursday that it was providing liquidity to the state-backed China Securities Finance Corp. Hong Kong’s Hang Seng soared 4.3%.
“The market is still uncertain, but it’s much better than previous days”, Qian Qimin, an analyst from Shenyin Wanguo Securities, told AFP. Hong Kong’s Hang Seng tumbled in the last hour of trading, a victim of the turmoil in mainland Chinese markets, to close with a loss of 5.9 percent. But the index was still down almost 4 per cent this week.
According to the BBC, there are several possible reasons for Chinese stock index’ continuing downtrend.
Miranda Carr at Espirito Santo said: “The current battle between the Chinese government, which is attempting to support the market, and the highly leveraged, increasingly panicky retail investors is being won by the latter”.
“The Hong Kong market has been oversold, the valuation is very cheap and this should attract investors to come back to the market”.
But some analysts warned that it was too early to say if savage market correction was over, noting that the pace of deleveraging is accelerating and the market performance is being distorted by the fact that over half of China’s listed companies have halted trading. An estimated 80 percent of transactions on Chinese stock markets involve such investors, many of whom tend to make investment decisions based on price movements rather than on corporate performance and economic forecasts.
One reason: A growing number of working-class Chinese families bought stocks to cash in on the rally and often did so by buying on margin, a term for borrowing money and using the stocks as collateral. “It’s probably the cheapest major market in the world”, he said. By comparison, H-shares trade at around 10 times earnings. “What does this mean to their earnings and balance sheets?” he said.
Beijing has been unveiling a raft of new measures on a near-daily basis in a bid to halt the stock market plunge.
The plunge in China’s previously booming stock markets, which had more than doubled in the year to mid-June, is a major headache for President Xi Jinping and China’s top leaders, who are already grappling with slowing growth. “We’re not sure how long this volatile period will last, but to me the medium- to long-term outlook for China is still trending up”, he said. “There are only about 50 million active investors [out of] a population of 1.3 billion”.
Elsewhere the CSI 300, which comprises the 300 largest firms on the Shanghai and Shenzhen exchanges, rose 6.40%, while small-cap indices such as the CSI 500, Shenzhen Composite, and the tech-heavy ChiNext added more than 3%.
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The move is aimed at maintaining “stability of the capital market and earnestly protect investors’ legal rights”, the commission’s statement said.
