Exchange denies rumor that Goldman Sachs is shorting China's stock market

[SHANGHAI] China's Financial Futures Exchange on Wednesday squashed rumors that foreign investors including Goldman Sachs have been shorting Chinese stocks using index futures, the latest move by regulators to calm market anxiety following two weeks of panic selling.

The deep correction in China stocks, which knocked main indexes down over 20 per cent in just a fortnight, has sparked conspiracy theories involving foreign speculators.

Rumors have been swirling lately that overseas institutions including Goldman and the Hong Kong unit of China Southern Asset Management Co have been shorting China's index futures.

The Financial Futures Exchange, which hosts China's stock index futures, said on Wednesday that the 63 overseas institutions that currently trade index futures in China, including Goldman, can only trade for risk-hedging purposes.

China Southern hasn't even opened an account at the exchange, the exchange said. "These institutions' risk-hedging using index futures conform to relevant rules, and there's no such thing as massive shorting," it said in its official microblog.

The exchange said it would ask regulators to punish those who spread rumors that threaten to seriously disrupt market order.

Goldman declined to comment on the rumour. China Southern's Hong Kong unit couldn't be immediately reached for comment as Wednesday is a public holiday in the city.

REUTERS