Chinese police find ‘clues’ of $3.2 trillion stock market crash

“The investigation team led by China’s Vice Minister of Public Security Meng Qingfeng has found clues of manipulation”, state-run Xinhua news agency reported, stating that the team is currently carrying out further probes.

It did not provide other details. Chinese police joined the securities regulator to probe clues related to recent chaos in the stock market. The investigation team visited the head office of the China Securities Regulatory Commission in Shanghai on Thursday to investigate what it called “malicious short-selling of stocks and stock indices”, an example of the dodgy practices many believe were part of the recent stock crash over the past few weeks.

After China’s key stock index plunged by over 30 <g data-gr-id="48">per cent</g> from its June 12 peak, the government has stepped in with various measures to stabilise the market, including pouring in funds and restricting futures trading on a major small-cap index. On the back of the government announced supportive measures, the stock market staged a strong rebound for a second consecutive day on Friday, with the benchmark Shanghai Composite Index surging 4.54 <g data-gr-id="49">per cent</g> to end at 3,877.8 points. Meanwhile, China’s securities watchdog today announced that it will crack down on illicit securities trading so that the market can recover steadily. “Some institutional or individual investors hold ‘virtual’ securities accounts or trade with borrowed accounts. As real-name registration is required by the law, this illicit conduct may damage other investors’ legitimate interests,” said the China Securities Regulatory Commission (CSRC).

The commission asked local authorities to verify the authenticity of securities accounts and be more strict when supervising them. Institutional and individual investors will be prohibited from lending their accounts to each other. The CSRC said it will clamp down on any illicit conduct in accordance with the law, and will transfer violators to the police.

Meanwhile, industry body Assocham has warned that economic troubles in China may have <g data-gr-id="31">significant</g> impact on India, particularly in sectors like IT and steel.

While it is true that fall in commodity prices, linked to China’s slow demand, is <g data-gr-id="38">a positive</g> for India, the development is not all that positive for a host of metal and iron ore producers like SAIL, Tata Steel, NMDC and upstream oil producers, a paper, which analysed the impact of the problems in China on Indian economy, stated. 

“A sharp fall in iron ore, steel and copper prices has equally hit the Indian manufacturers as any other company in the world. “Besides, if a <g data-gr-id="32">bubble like</g> situation erupts from China, the impact will be seen all around the world to which the Indian economy is too well entrenched into. China is number one merchandise trader in the world with over $4.16 trillion worth of trade, followed by the US with $3.9 trillion,” Assocham said.