China’s stock regulator to restrict major shareholders’ sales

It said that was meant to avoid causing more price volatility.

The decision by authorities in the country comes after the Shanghai composite index fell 7 per cent on Monday, the first day of trading in the New Year, raising fears of another Black Monday of panic selling and tumbling prices. As a result, it maytake time for market participants to get used to the new system.

Stockholders who own more than 5 per cent of a company will be required to sell shares through private transactions to “avoid shocks to the market”, the China Securities Regulatory Commission said on its microblog.

How long any reprieve will last is still in question.

Its heavy handed approach to the stock market crash and its surprise devaluation of the yuan in August had called its policymaking into question and sparked global market volatility. The market rout alienated small investors who were left holding shares worth less than they paid.

Repeated and often heavy handed interventions by Beijing have kept stock valuations at what many consider excessively high given the slowing economy and falling corporate profits. “The market drop is overdue”.

He added that foreign investors never had much presence in China’s stock market and “they will be less and less present”.

In the U.S., trading is halted temporarily after declines of 7 per cent and 13 per cent in the Standard & Poor’s 500 Index, and only suspended for the rest of the day if the losses reach 20 per cent.

He took advantage of the mild bounce on Tuesday to exit his position, saying he had “learned a lesson in blood”. It slipped to fresh 4-1/2 year lows on Monday, which some blamed for aggravating the stock market slump.

The CSRC also stressed that the “national team” – which buys stocks at behest of the government – “will not quit” and its function to stabilize the market will not change.

Chinese shares on Monday began with losses after data showed manufacturing contracted for a fifth straight month and investors anticipated the end of a ban on share sales by major stakeholders at the end of this week.

Policymakers need to “gradually explore, gain experience and make adjustment” to circuit breakers, China Securities Regulatory Commission spokesman Deng Ge (鄧舸) said in a statement yesterday.