Regulator seeks to slow stock market plunge with threat to punish those who flout ban as other markets continue to suffer
China’s securities regulator took the drastic step of banning shareholders with stakes of more than 5% from selling shares for the next six months in a bid to halt a plunge in stock prices that is starting to roil global financial markets.
The China Securities Regulatory Commission (CSRC) said on its website late on Wednesday that it would deal severely with any shareholders who violated the rule.
The prohibition is also seen applying to foreign investors who hold stakes in Shanghai- or Shenzhen-listed companies, although most of their holdings are below 5%.
An IG Markets strategist, Evan Lucas, said: “Iron ore has just logged its worst trading day on record. The steel price in China is now cheaper per tonne than cabbage.”
Separately, major shareholders of top Chinese banks including Industrial and Commercial Bank of China (ICBC) and companies including Sinopec pledged to either maintain their holdings or increase their stakes in the listed companies.
The announcements came after China’s stock market showed signs of seizing up on Wednesday, as companies scrambled to escape the rout by having their shares suspended and the CSRC warned of “panic sentiment” gripping investors.
Despite the turmoil, China’s cabinet has said the country can reach its economic and social development targets this year. A statement from the State Council said: “Positive signs have been increasing in the last two months and structural readjustment has been accelerated.
Full article: China bans major shareholders from selling their stakes for next six months (The Guardian)