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China stock market already testing new chief regulator
A SPELL of panic in China's tech hub showed the country's equity market is still very nervy.
The Shenzhen Composite Index suddenly tumbled as much as 2.7 per cent on Tuesday morning, with shares of more than 20 companies dropping by the 10 per cent daily limit that's allowed by the exchange.
While traders initially attributed the moves to criminal charges filed on Monday by the US against Huawei Technologies Co, the bulk of the declines only occurred about 30 minutes after the market opened.
The losses eased after China's securities regulator dismissed a local media report that said newly appointed chairman Yi Huiman would prioritise the introduction of shortselling tools in 2019.
The Shenzhen benchmark, punished because it hosts new economy stocks that tend to command the loftiest valuations, ended the day down 1.1 per cent. It has still advanced 2.6 per cent this month after a 33 per cent rout in 2018, its worst year in a decade.
The China Securities Regulatory Commission's response gave some relief, KGI Asia Ltd executive director Ben Kwong said. "Investors are usually worried about policy changes, so they're a bit sensitive to market speculation. They will keep an eye on what kind of new measures will be announced after the change in the CSRC chairman," he said.
Shortselling gained a bad reputation in China after it was partly blamed for the market's spectacular crash in 2015, with leveraged punters using index futures to bet against the entire market. Curbs put in place at the time largely shut out bearish speculators. China has been considering easing some restrictions since last year. BLOOMBERG