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China tightens control over its stock exchanges with net sales ban

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China tightens control over its stock exchanges with net sales ban

China’s economy is being rocked by a severe real estate crisis. Getty Images

In a new regulation, China prohibits large institutional investors from reducing their share holdings at the opening and closing of the stock market.

With this intervention in the market, China is not only trying to support it, but also increasing its control over the stock market.

This could help government-backed funds influence the market – especially during the affected period.

The Chinese stock market is experiencing a significant change. Like „Bloomberg“ reported, China has banned large institutional investors from reducing their stock holdings in the market at stock market open and close. This regulation poses a challenge for investors, but could support government-sponsored funds.

Institutional investors are not allowed to sell more shares than they buy when the stock market opens and closes

China issued a new regulation banning industrial investors from short selling at the opening or closing of stock markets. “Bloomberg” shares this in one thing Article with. Major asset managers and proprietary trading departments were recently informed about this, say people who wished to remain anonymous. According to the report, companies are not allowed to sell more shares than they buy in the last 30 minutes before the market closes or the first 30 minutes after the market opens, “Bloomberg” quotes the anonymous sources.

With this intervention in the market, China is not only trying to support it, but is also increasing its control over the stock market. It could also shake up popular strategies used by investors and hedge funds, explains Bloomberg.

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Not only that, the newly appointed chairman of the China Securities Regulatory Commission also formed a task force. It consists of the country’s stock exchanges and is intended to monitor short sales and, if necessary, warn affected companies. This regulation is not intended to affect individual investors. “Bloomberg” reports that it is still unclear how the regulation will extend to China’s financial industry.

The China Securities Regulatory Commission was contacted by Bloomberg for comment but did not respond.

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