Chinese police visited the office of the country’s securities regulator on Thursday to investigate clues that suggest “malicious” short-selling of shares, state news agency Xinhua said, the latest effort by authorities to prevent a further meltdown in the stock market.
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“If you sell huge amounts of stock on the spot market and sell lots of futures contracts, then you’ll probably be a “malicious short seller””, said Jiang Lin, an analyst at Xinhu Futures Co.in Shanghai.
As detailed by ValueWalk on Wednesday, Chinese government has banned large shareholders from selling shares.
China’s 21 major securities brokers announced Saturday they would spend no less than CNY 120-B (US$19.62-B), or 15% of their total net assets, on exchange traded funds (ETF) that track the performance of blue chip stocks, to arrest the market slump. China Securities Finance Corporation Limited (CSF), the national margin trading service provider, will provide liquidity to buy public offering of fund and inject liquidity to fund companies, so as to boost investors’ confidence and ensure stable performances of the sector, according to the report.
The Shanghai market is down 32 per cent from its closing peak on June 12, when it had risen by more than 150 per cent in 12 months, in a borrowing-fuelled frenzy powered by millions of new retail investors. It did not specify the illegal activities or identify any individuals under investigation.
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“The regulators can catch some suspects, but for those behaviors that amount to financial crimes and go beyond the scope of regulators, the public security agency needs to step in”.
