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Shanghai stocks retreat 0.8% amid crackdown on speculators
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SHANGHAI shares fell for the first time in three days yesterday, extending the biggest two-month drop since 2008 amid a crackdown on speculators and as doubts grew of another round of government intervention.
The Shanghai Composite Index retreated 0.8 percent to 3,205.99 points at the close, paring a loss of as much as 3.8 percent. Shares of banks rose sharply in the afternoon session to narrow the loss. Bank of Communications Co surged 9.5 percent to 6.37 yuan and China Everbright Bank Co jumped 9.6 percent to 4.21 yuan.
Citic Securities Co slumped 6.9 percent as the nation’s largest brokerage said in a filing to the Shanghai Stock Exchange over weekend that a couple of its top executives are under investigation for insider trading.
Four executives of Citic Securities, a journalist at business magazine Caijing and a staff member at the China Securities Regulatory Commission (CSRC) have all confessed to stock-related crimes, Xinhua News Agency reported. They reportedly spread false information that caused “panic and disorder.”
The move comes soon after 11 people were detained for “illegal market activities” last Tuesday when Shanghai gauge fell 22 percent over four trading days.
The government is intensifying crackdown instead of boosting the market with large-scale purchase as the regulator felt “they allowed too much information to become public,” Financial Times quoted an unnamed source as saying yesterday. Even so, analysts saw clues of government intervention in equities last Thursday to halt the biggest sell-off since 1996.
CSRC summoned senior officials from 19 brokerages, equity and futures exchanges and government-controlled industry associations on Saturday, and ordered them to step up oversight and support of the markets.
“There is a lot of confusion about purchases of stocks by state-linked funds,” Gerry Alfonso, a sales trader at Shenwan Hongyuan Group Co, told Bloomberg News. “Disclosures are very limited so it is impossible to know what they are doing with certainty.” Alfonso said.
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