Legal crackdown on financial rumormongers

By Wang Yanlin  |   2008-6-23  |     ONLINE EDITION

CHINA will spare no efforts to facilitate the stable growth of the country's capital market and further strengthen the market supervision, said Shang Fulin, chairman of the China Securities Regulatory Commission.

"Under the current circumstances, we have to keep a clear mind about market trends, which are usually moving upward among corrections," said Shang during a meeting on late Sunday, which was reported by the China Securities Journal today.

Shang said the regulator will take legal action to punish those who spread false information or rumors about the capital industry, which can disturb market order and worsen market performance.

Also, the regulator will publish on a regular basis information of previously locked-up shares, encouraging and directing long-term capital into the stock markets.
The regulator will also enhance coordination with public security and judicial departments to seek punishment against offenders of market manipulation, false information disclosure and embezzlement in listed firms.

China's two bourses have plunged severely since the second half of last year. The benchmark Shanghai Composite Index has fallen more than 50 percent to around 2,800 points this month since October last year when it reached a record high of 6,124 points.

The CSI 300 Index, which tracks the 300 biggest listed firms in Shanghai and Shenzhen, has dropped 48 percent this year and touched a record losing stretch this month with a decline of 22 percent in 10 days.

China became the second worst performer in Asia this year despite the regulator beefing up efforts to bolster stock markets, including cutting stamp duty in April and introducing an off-market block trading system to make the trading of shares after their lock-up period more transparent.

Last week, Shang said an "excessive or too rapid" openness towards foreign participation would create potential financial risks.