China regulator 'urges fund managers not to offload shares'
Selling curbed unless fund companies face redemptions, sources say; Chinese stocks tumble after market reopens
Add BT as a preferred source
DeeperDive is a beta AI feature. Refer to full articles for the facts.
Beijing/Shanghai
CHINA'S securities regulator has urged some mutual fund managers not to sell shares unless they face investor redemptions, four sources told Reuters, as the country's stock markets plunged on Monday amid a growing virus outbreak.
The China Securities Regulatory Commission (CSRC) is giving verbal instructions to major mutual fund companies, asking them not to offload their stock holdings on Monday unless necessary, according to the fund sources with direct knowledge of the so-called window guidance. Selling in the following days should also be restrained, two sources said.
Despite the sales restrictions - issued by CSRC on Sunday evening according to one source - the market still plunged.
Chinese stocks tumbled more than 8 per cent on Monday morning as mainland markets reopened following a 10-day break, giving investors the first chance to react to the rapidly-spreading coronavirus. The death toll from the epidemic has crossed 360 in China.
"Potential massive investor redemption is a big concern," said one fund executive. "If that happens, mutual fund managers have no choice but sell."
Navigate Asia in
a new global order
Get the insights delivered to your inbox.
Chinese regulators had taken other measures to limit the virus' damage to the country's financial markets.
Over the weekend, CSRC issued a verbal directive to brokerages including Citic Securities and China International Capital, seeking to limit shortselling activities by their clients on Monday.
In addition, the central bank injected 1.2 trillion yuan (S$236 billion) worth of liquidity into the banking system on Monday via open market operations to calm market anxiety.
CSRC's latest window guidance - verbal instructions from regulators to mainly Chinese companies - risks inviting fresh criticism from foreign investors who have complained about a lack of transparency and an uneven playing field in China.
Regulators have been more careful with such measures to stabilise the markets, especially after MSCI added Chinese shares into its emerging markets index, another fund manager said. REUTERS
Read more virus outbreak reports:
Share with us your feedback on BT's products and services
