China’s securities regulator has initiated an investigation to crack down on stock-market manipulation and insider trading after a slump of around 30 per cent in Chinese stocks since mid-June.
China’s securities regulator will inquire the suspected manipulation of the stock market to catch on whether parties were mis-selling financial products. The China Financial Futures Exchange (CFFEX) has brought 19 accounts under lens from short-selling for a month as reported by Reuters news agency.
The China Securities Regulatory Commission (CSRC) has come into action after the Shanghai Composite index has slumped about 30% since mid-June, wiping out most of this year’s gains. CSRC would base its investigation on reports of abnormal market movements from the stock market and futures exchanges.
Some reports have accused overseas investors of driving prices down by short-selling stocks on Chinese bourses. But an editorial in the state-run Global Times has denied that allegation of manipulating stocks as overseas investors have limited access to Chinese markets.
Shanghai exchange, known to be one of the best performing in the world, has more than doubled its value in the last 12 months. But the recent losses have wiped out trillions of dollars of share value. However, analysts advocated that the slump was triggered by concerns over inflated valuations and is a correction in the market, which had risen by 150% in the last year. Further, Shanghai Composite has already initiated policy moves of cutting in the cost of borrowing and easing of margin lending rules, making it easier for brokerages to lend money.