2024-01-29 05:27:53
Measures to stop the bleeding of stocks
The authorities are taking these measures in the wake of the alarming decline in Chinese stocks, as the MSCI China Index lost regarding 60% of its value following reaching its peak in February 2021. Last October, the authorities set limits on lending for stocks that… Executives and other key employees receive it for strategic proposals, along with other restrictions. Since then, the outstanding value of shares lent by strategic investors has fallen by 40%, the Securities Regulatory Commission said on Sunday.
The MSCI China Index recorded its first weekly gain this year last week, reducing its loss for 2024 to regarding 7%, following the central bank announced an imminent reduction in the mandatory reserve requirement rate and targeted fiscal stimulus plans.
The Chinese Central Bank reduces banks’ mandatory reserves in early February
Bloomberg previously reported that state-owned Citic Securities has stopped lending shares to individual investors and has raised requirements for institutional clients.
However, limiting short selling is unlikely to provide a sustainable boost to stocks especially as sentiment remains weak. In 2015, China imposed restrictions on short selling to force day traders out of the market, as buying and selling on the same day was considered a driver of “abnormal volatility”, but the market continued to decline in the following months.
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