chinese securities regulator strikes an ambiguous note on market intervention 1919152015

The Chinese Securities Regulatory Commission (CSRC) said Friday at a news conference that it would henceforth allow market forces a freer hand in determining the direction of Chinese stock markets, though it would keep unchanged its role as an invigilator to guard against systemic risk and instability.

"With market fluctuations gradually shifting to normal, from wild and abnormal, we should let the market exercise its function of self-adjustment," the China Securities Regulatory Commission told a news conference in Beijing, according to a Reuters report.

Supporters of free markets, who have strongly criticised Beijing’s intervention in the country’s stock market collapse, may not have much to rejoice about, however – because what the CSRC gave with one hand, it took away with the other.

For, the same day, the CSRC also said in a post on its official Weibo micro-blogging page that the China Securities Finance Corp. (CSFC) would continue to support the stock markets for some time to come.

"For a number of years to come, the China Securities Finance Corp. will not exit (the market),” the CSRC said in the blog. “Its function to stabilize the market will not change,"

The CSFC, the state-owned financial vehicle that provides margin money financing to the stock markets, was the central player in the Chinese government’s intervention to prop up stock markets after a shock collapse commenced mid-June. The CSFC eased margin money financing norms and used funds provided by state-owned banks to buy stocks in a big way, deterring short sellers.

That the CSFC is in for the long haul also became clear in another CSRC statement Friday which revealed that certain shares, which CSFC bought during its market stabilisation role in the meltdown, had been transferred to Central Huijin, an investment unit of sovereign wealth fund China Investment Corp.

"Today, CSF transferred some listed companies' shares to Huijin,” Central Huijin said in a statement on its website. “Huijin will strive to keep and increase the value of the assets, based on long-term investment philosophy."

It is interesting that the CSF has been able to palm off its shares to Hujin. In other measures designed to support the markets, the regulator barred ‘big’ investors from off-loading their stakes on the market, and a ban on short selling meant that these investors also could not hedge their holdings.

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

FOREX.com is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment and CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.forex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.forex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 42.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.

Delayed London Stock Exchange (LSE) Data

The London Stock Exchange (LSE) market data displayed or referenced on this website is provided on a delayed basis and is not in real time. The delay period may vary but is typically at least 15 minutes. This data is intended for information purposes only and should not be relied upon for trading, investment, or other financial decisions. We do not guarantee the completeness, reliability, or suitability of the data for any particular purpose. Users should consult real-time data sources and obtain professional advice before making any financial decisions.