New normal: China to wage sustained war against suspicious traders
Regulatory commission official says tough surveillance over securities market will be 'new norm' as authorities try to restore confidence
Beijing says it will crack down hard on suspicious trading, vowing tough enforcement would become a "new norm" as it tries to rein the excesses that have shaken the A-share market.
, the Communist Party's mouthpiece, reported on Monday that suspicious market manipulators chasing profits had exploited new technologies, investment products and business models during the roller-coaster ride.
"The China Securities Regulatory Commission [CSRC] will keep up a high-handed crackdown on various kinds of illegal behaviour and tightened regulation will become a new norm," an unidentified official from the agency was quoted as saying.
The statement was seen as an attempt to place responsibility for the rout on unethical traders, rather than the regulator and its unsuccessful policies aimed at restoring stability. The CSRC also said it would strengthen supervision of the grey financing market, which channelled an estimated 2 trillion yuan (HK$2.43 trillion) in unregulated funds to investors who bought on margin.
"It's not wrong to take strong action against those bad boys," said Zhou Ling, a hedge fund manager at Shanghai Shiva Investment. "But it's unfair to blame them for the market turbulence."
The financial authorities started to intervene in the market in June, shelling out more than 1 trillion yuan to stabilise trading, but without success. The Shanghai Composite Index topped 5,100 points in mid-June before steadily dropping in July and August to fall just below 3,000 near the end of last month. It has recovered slightly, rising 1.9 per cent yesterday, to close at 3,156.54 points.
Beijing has singled out dozens of people, including officials tasked with regulation, brokerage executives, company bosses and even a journalist for the chaos. Among them are CSRC's assistant chairman Zhang Yujun and Citic Securities president Cheng Boming who are suspected of serious disciplinary violations and insider trading, respectively. Aside from Citic, other major brokerages such as Haitong and Huatai securities were fined for directing unofficial margin loans to the market.
Read more: Beijing investigates senior figure at China’s state securities regulator in latest step to crackdown on market irregularities
Industry insiders said it was an open secret the regulator was "turning a blind eye" to the grey financing market in the lead-up to the collapse.
State-owned media were touting the rally in May as an efficient means to support the reform of state-owned firms and restructure domestic economic growth in May.
The CSRC also identified 39 shareholders of listed firms who had allegedly improperly sold down stakes, describing the off-loading as moves that severely hurt investor confidence and exacerbated the weak sentiment.
