(Before It's News)
As Stocks Plunge, China Enacts Six-Month Ban on Stock Sales By Major Shareholders
As China suffers under a stock market crash that has been compared to the 1929 US crash that sparked the Great Depression, China’s Securities Regulatory Commission announced on Wednesday that it is enacting an emergency ban on stock sales by investors with over 5% ownership in a company.
Jul 8, 2015
As China’s stock exchanges plunge in a panic that has been likened to the 1929 US stock market crash that set off the Great Depression, Bloomberg is reporting that China’s Securities Regulatory Commission has enacted a six-month ban on sales of shares by investors who hold over a 5% stake in a listed company. Under the new policy, executives and directors of listed companies are also banned from selling their shares during the next six months. “There is a mood of panic in the market and a large increase in the irrational dumping of shares, causing a strain of liquidity ,” read a Wednesday statement on the new policy by the Securities Regulatory Commission.
Deltec Asset Management LLC money manager Gregory Lesko told Bloomberg, “[The policy] may have a small impact in the short term, but like all market manipulation, there will be a price to be paid later. ”
Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management, said, “The extent to which they can apply this [ban] to foreign ownership interest remains to be seen.” According to The Financial Times , the Securities Regulatory Commission has stated that it will “deal sternly ” with investors who violate the ban. Meanwhile, the government-run China Securities Finance Corporation has been purchasing stocks directly using funds injected into the market by the People’s Bank of China in an effort to artificially prop up stock prices. Also, some Chinese stock exchanges are allowing particular companies to freeze sales of their shares. Bloomberg estimates that at least 1,331 companies have stopped trading so far.
Source:
http://nesaranews.blogspot.com/2015/07/china-enacts-six-month-ban-on-stock.html
