The Shanghai Public Security Bureau sent officers to major securities trading outlets yesterday, fearing unrest among retail investors following a seven-point crackdown on share investments by banks and brokerages. The central People's Bank of China (PBOC) on Thursday banned commercial banks from trading in treasury bond repurchase (repo) agreements, ordered them to unwind stock positions within 10 days and barred brokerages from margin trading. Analysts described the moves as a bid to stem the flow of illegal funds to the Shanghai and Shenzhen markets. Traders reported signs of panic selling in Shanghai, but said there were no signs of unrest as Shanghai police made their presence felt at major brokerages, including Shenyin & Wanguo Securities, Haitong Securities and Shanghai Finance Securities. 'The central government and Shanghai government are taking no chances with just three weeks to Hong Kong's handover, and are taking every precaution to ensure stability,' a Shanghai Finance Securities analyst said. Unconfirmed reports said Shanghai was taking extra precautions because vice-premier Zhu Rongji - the man behind the crackdown - stopped in Shanghai yesterday before flying back to Beijing after a trip abroad. Shenzhen investors appeared to react more calmly. Shanghai-based analysts said although the latest crackdown angered retail investors - many of whom bought into the markets before the on-going series of cooling measures - they did not expect trouble. Brokers said although the directive was essentially based on market-cooling measures announced earlier, the markets plummeted as investigations appear to be becoming a regular feature of the industry. The directive, said the PBOC, would take over from brokerages the task of supervising clients' funds, to prevent misuse of the money. Analysts said the ban on commercial banks in repo activities was the harshest of the measures, as it cut off the key source of funds for share speculation. Haitong Securities analyst Zhu Zhang said: 'If you examine the directive carefully, it is really a strong and direct hit on the market as bank funds must be withdrawn within 10 days.' The PBOC move sent share and spot T-bond prices sharply down. In Shanghai, the A-share Index plunged 6.30 per cent to end at 1,331.93 points, while the B-share Index lost 4.34 per cent to 85.33 points. Combined turnover hit 13.16 billion yuan (about HK$12.21 billion). In Shenzhen, the A-share Index fell 6.83 per cent to close at 440.21 points, while the B-share Index dropped 3.83 per cent to 150.77 points. Turnover was a heavy 13 billion yuan. It was the sharpest fall since May 22, when Beijing said it would ban state-run and listed companies from trading stocks for short-term profit on top of penalties for brokerages found guilty of illegal trading practices.