After failing to arrest the downturn in the equities market with monetary easing measures and the relaxation of margin loan rules, the Chinese regulator will be going after those suspected of manipulating the stock market.
According to China Daily, China Securities Regulatory Commission will launch an investigation on those suspected of manipulating the market, with focus on “such activities occurring simultaneously in multiple markets.”
The Shanghai Composite Index has fallen more than 20% since its mid-June peak, after rules on margin lending, which funded the rally, have been tightened, stressing investors. The Greek crisis drama, which played out for weeks before last Sunday’s climax when the country failed to secure a debt relief from its creditors, likewise dented sentiment.
In an effort to stem an expected market selloff after Greece’s debt talks finally collapsed Sunday, the Chinese central bank, the PBOC, announced the reduction in its policy rates, as well as the lowering of the banks’ reserve requirement ratio, the first time they were done simultaneously since the 2008 financial crisis.
When the policies did not reverse the gloomy sentiment, more steps were taken including infusion of money into Shanghai’s top four ETFs tracking indexes, the relaxation of margin lending rules that allowed contracts to be rolled over, and the plan to allow the country’s pension fund to invest in stocks for the first time ever.
But these measures did not work as well as the index closed down 3.5% in another volatile session Thursday.
China Daily said the CRSC will turn over any criminal cases that will result from its investigation to the police.
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