A fading real estate market, state-owned bank stock movements, and regulatory concerns contributed to the spiralling performance of Chinese markets on Monday, 5 February 2024. According to the Associated Press (AP), Chinese shares hit five-year lows after the Chinese Securities Regulatory Commission (CSRC) met on Sunday, 4 February 2024 and posted a notice on its website.
Chinese regulator tries to placate investors as shares spiral
This notice attempted to appease individual investors amid the sell-off of property shares and reported state-sanctioned buying of national banks and other prominent stocks, which boosted the share price of these institutions. The CSRC claimed that it would stamp out share price manipulation and what it termed “malicious short selling”.
While technology stocks suffered, banks such as the Industrial & Commercial Bank of China and Agricultural Bank of China gained 2.3% and 2% respectively. The Shenzhen Composite slipped by as much as 4.4% at one stage. Following suit, the Shanghai Composite also slumped 3.5% during Monday’s trading.
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As one of the biggest losers, the CSI 100 experienced an 8.7% drop before closing the day at 6.2% in the red. AP summed up the current Chinese market clime by quoting Stephen Innes, a longstanding trader with entrenched knowledge of the G10 and Asian markets. He said:
The situation in the Chinese equity market appears tumultuous, reflecting broader concerns about regulatory uncertainty and government intervention.
After the CSRC notice appeared, Zhang Xiaojin, a spokesperson for the crimes division of the Supreme People’s Procuratorate, told the Securities Times:
Protecting the rights of investors is the top priority. We will continue to increase the intensity of punishing financial crimes in key areas, and severely crack down on crimes that seriously disrupt the order of the capital market in accordance with the law.
