CITIC To Support Chinese Government Measures To Stabilize Stock Market
China’s top securities broker, CITIC Securities, responded Sunday to claims that it has sold short Chinese shares.
Friday, the Shanghai and Shenzhen exchanges restricted trading of 24 accounts as they were suspected of misleading other investors by frequent orders and cancellations.
One of the accounts used to be owned by 2 shareholders, a foreign hedge fund and the Shenzhen-based CITIC United Venture Investment Co., Ltd., a subsidiary of CITIC Securities.
Market rumors began that CITIC Securities had ganged up with foreign hedge funds to sell Chinese stocks short.
In response, CITIC Securities said the historical investment started in Y 2010, but ended after the company transferred its equity in November 2014. It does not own the hedge fund’s stock rights any more.
CITIC insisted it will support the government’s regulatory measures to stabilize the stock market.
After the massive sell-off since mid-June, the Chinese government has unveiled a slew of measures to prop up the market, including reducing the number of new shares to avoid a shares glut, a police crackdown on short-selling and a six-month ban on big shareholders selling stocks.
Before the market took a downturn on 12 June, the Shanghai composite had risen by 152% since July 2014 and nearly 60% since the beginning of the year, running far ahead of economic fundamentals during the frame.
Chinese shares continued to drop last Friday as investors showed caution in the shadow of the earlier market stampede.
The benchmark Shanghai Composite Index fell 1.13% to close at 3,663.73 pts. The Shenzhen Component Index fell 0.18% to close at 12,374.25 pts.
Have a terrific week.
HeffX-LTN
Paul Ebeling
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