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In struggle to stem market rout, China hunts manipulators
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China's securities market regulator has opened an investigation into suspected market manipulation, in the attempts to head off a potential stock market crash that could damage an already slowing economy.
After a slump of more than 20 percent in Chinese stocks since mid-June, the China Securities Regulatory Commission (CSRC) has set up a team to look at "clues of illegal manipulation across markets."
On Thursday, Shanghai's benchmark composite index slumped below 4,000 points for the first time since April — a key support level that analysts had expected Beijing to defend. It had more than doubled over the last year, fueled in large part by speculators using borrowed money to bet on shares.
"This is happening against an (economic) growth backdrop that continues to look soft, as illustrated by the flat manufacturing survey this week," noted analysts at Barclays.
"With growth data still soft, China remains a key uncertainty for the global outlook."
China has been struggling since the weekend to find a policy formula that would restore confidence to the stock markets.
So far, rapid fire steps including easing monetary policy, encouraging more pension funds to invest in stocks and cutting transaction costs have failed to stem the rout.
The CSRC has also relaxed rules on using borrowed money to speculate on stock markets, letting brokerages set their own tolerance level on margin calls and allowing the roll-over of margin lending contracts.
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