China bars ‘big’ shareholders from selling: regulator

The Singapore Straits Times said the mainland share prices started its downward spiral when China’s securities regulator warned that it would tighten rules on margin trading for individual investors.

The decision on Wednesday follows a raft of other emergency measures-that have had no discernible impact. The benchmark Shanghai Composite Index sank 5.9 percent to finish at 3,507.19 points.

The China Securities Regulatory Commission, meanwhile, is asking major shareholders and senior executives of listed companies to not sell stocks of their own companies for the next six months. “Liquidity is totally depleted”, said Du Changchun, an analyst at Northeast Securities.

Crude oil prices bounced on Thursday following losses earlier in the week, with Chinese stocks picking up after the government put in place new efforts to stop a rout that had knocked off a third of the country’s share market value.

The rescue plan announced announced over the weekend focuses on helping blue chips and did not pay much attention to small counters that led to panic selling in those companies.

The insurance regulator on Wednesday eased rules for insurers to invest in blue-chips.

“For the goal of a supporting the stock market’s stable development, the People’s Bank of China will actively assist China Securities Finance to have liquidity by way of repo, collateral lending or issue financial debt papers”, the PBOC said in a statement posted on its website on Wednesday.

China’s Finance Ministry and state investor Central Huijin Investment Ltd pledged not to reduce their shareholdings in the country’s Big Four banks – Industrial and Commercial Bank of China Ltd (ICBC), China Construction Bank, Agricultural Bank of China Ltd and Bank of China Ltd.

Indeed, the Obama administration is anxious the stock market crash could get in the way of Beijing’s economic reform agenda.

The CSRC also decided to increase the margins for the China Security 500 index futures contracts to 20 per cent from 10 per cent, and to further raise it to 30 per cent on Thursday in a bid to control the market risks.

As the daily drumbeat of official announcements aimed at propping up the sinking equity market continued, state news agency Xinhua said police would investigate “malicious” short selling of stocks, and the banking regulator said it would allow lenders to roll over loans backed by stocks.

A trading center in Shenyang, Liaoning province, July 8.

“And the problem of the market is that all the players move in the same direction, and are too emotional”.