Chinese regulators have banned major investors, corporate executives and directors from selling shares in any publicly traded company in the latest of a series of measures aimed at propping up the country’s volatile stock markets.
The move, meant to stem declines of more than 30 percent in the country’s main stock indexes in less than a month, follows a series of interest rate and reserve requirement cuts, a ban on IPOs and mass stock trading suspensions that have locked up more than half of the stocks in the country.
Chinese stocks rebounded on Thursday, closing up almost 6 percent.
The ban on stock sales applies to investors with a stake of more than 5 percent in a listed company and lasts for six months. The government has also offered support for 21 brokerage firms that have promised to buy a combined 120 bn yuan ($19 bn) in stocks and hold them for at least a year.
As the China Securities Regulatory Commission (CSRC) prepared to announce the ban, another 660 Chinese companies were allowed to suspend trading in their stocks, bringing to more than half the proportion of stocks on the Shenzhen and Shanghai markets that are suspended from trading.
After years of climbing stock prices that have attracted 90 mn individual investors and increased investment from major investors, the government is concerned plummeting stock prices will further retard the country’s already slowing economic growth rate. HSBC estimates that the average Chinese household has 15 percent of its assets in stocks.
Adding to a general unease in global markets, regulators on the other side of the world suspended all trading on the NYSE hours after China announced the surprise ban on stock sales by major investors. The NYSE suspension, which lasted more than three hours on Wednesday, was spurred by a software update that went wrong, Bloomberg News reports, citing two unidentified sources who were briefed on a preliminary review hours after the suspension was lifted.
The SEC says it is ‘closely monitoring’ the NYSE’s investigation into the cause of the suspension, which the stock exchange has called a ‘technical issue’.
