Timeline of Chinese government measures to halt stock slide
Jul 28, 2015, 3:06 AM
BEIJING (AP) — A timeline of government measures aiming at curbing a slide in share prices after China’s main market index peaked June 12 and fell sharply in the following weeks:
June 18: Regulators order Chinese brokerages to limit short selling, which the state press later blames for the slide in share prices.
June 27: Beijing announces a surprise interest rate cut — its fourth since November — in what market analysts say is a move to reassure investors recent changes in bank regulators are not aimed at limiting credit to finance stock trading.
June 29: The government announces its main pension fund for civil servants will begin investing in stocks. It says up to 30 percent of the fund’s assets will go into stocks. Based on the fund’s size, that would be up to 900 billion yuan ($145 billion).
July 1: Mainland China’s two stock exchanges in Shanghai and Shenzhen announce a 30 percent cut in trading fees.
July 3-5: At least two-thirds of initial public offerings planned for July are cancelled in response to concern there is too little demand for the new shares. The securities regulator announces an increase in the capital of state-owned China Securities Finance Co., which provides credit to finance stock trading, from 24 billion yuan ($4 billion) to 100 billion yuan ($16.1 billion). The regulator says the central bank will provide “ample liquidity” to finance trading. Separately, a group of 21 state-owned brokerages announce the creation of a 120 billion yuan ($19 billion) fund to support prices by purchasing shares.
July 8: Beijing prohibits stock sales for at least six months by major shareholders and orders executives and board members of companies to buy back any shares in their own companies that were sold in the past six months. They also are told to buy more if the price falls by 30 percent in the following 10 days. The insurance regulator announces insurers will be allowed to increase the amount they invest in stocks from 30 percent to 40 percent of total assets. Brokerages increase the size of their stock-buying fund to 260 billion yuan ($42 billion). Meanwhile, Central Huijin Investment Ltd., a unit of China’s $750 billion sovereign wealth fund, said it would buy more exchange-traded funds and avoid selling any Chinese shares. China Securities Finance Co. injects a total of 200 billion yuan ($32 billion) into five mutual funds to buy shares.
July 8: The number of companies that have suspended trading in their shares passes 1,000 out of a total of 2,802 traded on mainland exchanges. Many cite impending announcements about possible mergers or employee purchases of stock — moves that stem from Beijing’s effort to shore up prices. The suspensions freeze prices and leave shareholders unable to sell.
July 13: The police minister says some brokerages have been found to have improperly manipulated futures exchanges, a possible reference to short selling. It says a criminal investigation is underway but gives no other details. The securities regulator orders brokers to stop allowing customers to lend use of their accounts to other traders. Brokers also are ordered to sever ties with unlicensed companies that provide credit to finance share trading.
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