Key Points
Officials this week imposed caps on some brokerages cross-border total return swaps with clients, limiting a channel that can be used by China-based investors to short Hong Kong stocks, said the people, asking not to be identified discussing a private matter..
In a statement Monday, the China Securities Regulatory Commission said it recently discovered multiple cases of stock market manipulation and malicious short selling..
Measures to limit selling could provide some short-term relief but may be counter-productive as investors worry about their ability to exit the market, said Michael Hirson, China economist at 22V Research in New York..
The net result is that they may muddle through with stop-gap measures and hope that the selling runs its course, he said.. Chinese stocks with small- and medium-sized market capitalizations, which many quant funds trade on, have been under particular selling pressure lately..
In a separate statement on Monday, the securities regulator said it will guide brokerages to adjust their margin call levels and maintain flexible liquidation lines, in an effort to reduce pressure on the stock market and limit forced liquidations...
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