China supports major shareholders to buy more shares｜WCT

Meanwhile, the China Association for Public Companies urged shareholders and company executives “to buy back, increase their shares and other measures to stabilise the companies’ share price”.

In recent days, Beijing has sought to encourage stock purchases by cutting key interest rates, reducing stock transaction fees and relaxing rules on how much money traders must deposit in order to buy stock.

China’s securities regulator warned there was “panic sentiment” in mainland stocks on Wednesday, saying there had been a surge in “irrational selling” as markets plunged further into bear market territory.

More than 500 China-listed companies announced trading halts on the Shanghai and Shenzhen exchanges on Wednesday, taking total suspensions to about 1,300 – 45 percent of the market or roughly $2.4 trillion worth of stock – as companies sought to sit out the carnage.

Separately, major shareholders of top Chinese banks including ICBC and companies including Sinopec pledged to either maintain their holdings or increase their stakes in the listed companies.

Asian bourses, already under pressure from the protracted Greek debt crisis, also posted sharp declines as contagion from the rout in China spread, with investors running for safe-haven assets such as the yen. It has offered 260 billion yuan (42 billion USA dollars) of stock-secured credit for 21 brokerage firms to conduct self-run share purchasing on the market.

New measures to save China’s collapsing stock market. Stocks in Tokyo and Taipei ended the day down about 3 percent.

The CSI300 index of the largest listed companies in Shanghai and Shenzhen closed down 6.8 per cent on Wednesday, while the Shanghai Composite Index dropped 5.9 per cent.

The banking regulator, China Banking Regulatory Commission, on Thursday announced it will allow banks to extend mortgage loans that use share funds as collateral.

The de-leveraging process soon become uncontrollable, with investors who traded on margins forced to liquidate their stockholdings to make payment.

China’s Xinhua news reported Thursday that authorities have launched a probe into “vicious short-selling”, adding that authorities were “about to crack down on operations that are in violation of the law and regulations in a heavy-handed manner”.

By June 12, Chinese stocks had soared more than 150 percent in a year-long advance.

China’s central bank reiterated that it will continue to support the liquidity need of the CSF and has made sufficient re-lending to the CSF and approved the latter to issue short-term financial bonds in the interbank market to replenish liquidity.