china stocks toxic like shit

[Howitzer]

China's top securities regulator vows legal action against rogue officials who abuse power to trade stocks

Local branches urged to step up checks to stop staff from abusing power to trade in stocks

PUBLISHED : Sunday, 30 August, 2015, 11:10pm
UPDATED : Sunday, 30 August, 2015, 11:12pm

Jun Mai
[email protected]

The CSRC's disciplinary committee had instructed its local branches to intensify checks into irregularities. Photo: EPA

China's top securities regulator has warned its local cadres against abusing their power to trade stocks, vowing to take legal action against officials who violate the rules, amid a widespread crackdown on rampant market irregularities.

The China Securities Regulatory Commission's warning came as authorities investigate illegal securities trading, taking away several brokerages' senior executives for questioning.

Citic Securities confirmed on Sunday that public security officials had asked several of its senior management members and employees to assist in investigations, but said the company's operations remained stable.

The CSRC's disciplinary committee had instructed its local branches to intensify checks into irregularities, according to a notice on the website of the nation's top anti-graft agency, the Central Commission for Discipline Inspection.

The committee's chief, Wang Huimin, visited the CSRC's local branches in Fujian , Jilin , Shaanxi and Sichuan provinces, the notice said.

"Irregularities such as abusing power for stock trading will be resolutely handled, and legal responsibility will be pursued," the statement read.

The notice called on local CSRC branches to save their daily documents, and urged discipline inspection offices at different levels to conduct frequent checks on those documents.

Police took away eight Citic Securities officials last week, sending shockwaves through the mainland's stock market. One serving and one former CSRC official and a reporter from Caijing financial magazine were also questioned, Xinhua reported.

The South China Morning Post reported last week that Citic Securities managing director Xu Gang and two other members of the brokerage's executive committee, Ge Xiaobo and Liu Wei, were "asked to assist in the investigation", as was Liang Jun, the secretary of Citic Securities chairman Wang Dongming.

Citic Securities employees were now required to submit a report prior to leaving on business trips, China Business News reported.

Citic Securities said it was proactively cooperating with the authorities and initiating measures to "probe into problems that may exist in its business".

"The company will continue to adhere to the principle of compliant operation in accordance with the laws and regulations and contribute to the national economic construction and capital market development," it said.

State media published commentaries last week that said the authorities would punish those who breached market regulations and continue the investigations until they "got to the bottom of things".

The CSRC is also investigating Haitong Securities, GF Securities, Huatai Securities and Founder Securities.

 

[Sabra]

China's probe into market volatility deepens amid speculation over 'meeting' with top hedge fund manager

Speculation rife as top businesswoman Li Yifei attends "special meeting" on recent events

PUBLISHED : Tuesday, 01 September, 2015, 12:36am
UPDATED : Tuesday, 01 September, 2015, 12:36am

Liz Mak, Jun Mai and Kwong Man-ki

Li Yifei, country chairwoman of Man Group. Photo: Imaginechina

Beijing has tightened its grip on a financial market plagued by irregularities and left reeling from turbulence.

The latest effort involves the famous Chinese hedge fund manager Li Yifei, whose disappearance from public view in the past two days has prompted much speculation. Li is the chairwoman of the China unit of the Man Group, one of the world's largest hedge funds.

Bloomberg on Monday quoted a source as saying Li had been taken into custody by police to assist a probe into market volatility and her mobile phone had been switched off.

Li's husband, businessman Wang Chaoyong, denied the report. But he admitted his wife had been called to a special meeting with "relevant industry authorities" because of "the recent market volatility", mainland website Thepaper.cn reported.

"Foreign funds need to give information [to the authorities]. Because of the sensitivity of the meeting, all the participants must turn off their mobile phones and are not to contact the outside [without permission]," he told the website. The same day, Wang told another mainland news outlet, Caixin, that Li was at "a meeting in London".

In July, Beijing set up an investigation task force led by the Ministry of Public Security and financial regulators to crack down on illegal trading after a wave of panic sell-offs shocked domestic stock markets.

Wang said his wife was not responsible for the market rout. Bloomberg's report stressed the questioning of Li did not imply any wrongdoing.

A person familiar with the operation of foreign funds in China said it was most likely a fact-finding meeting for authorities to understand more about the operation of foreign hedge funds.

"I don't believe the move is to target foreign funds. It is normal for the regulators to call up some fund managers to understand what they are doing. The US and Hong Kong regulators are not polite either when it comes to short-selling activities," he said.

Rosanna Konarzewski, head of communications for Man Group, declined to comment.

Li is considered one of China's most powerful businesswomen.

Separately, Chinese financial journalist Wang Xiaolu and the stock market regulatory official Liu Shufan, implicated in a probe into suspected insider trading at Citic Securities, confessed on state television on Monday morning. Their appearance came hours after a midnight announcement that both men and four executives of the brokerage, including managing director XuGang, were being held.

Xu and three others, including executive committee member Liu Wei, head of the company's securities financing business Fang Qingli, and company director Chen Rongjie, had been criminally detained for suspected insider trading, Xinhua reported. In mainland law, "criminal detention" precedes formal arrest. Wang Xiaolu, of Caijing, had been accused of fabricating and spreading false information.

 

[Sabra]

Is disappearance of top female hedge fund manager another sign Beijing is tightening its grip on volatile market?

Speculation rife as top businesswoman Li Yifei attends 'special meeting on recent events

PUBLISHED : Tuesday, 01 September, 2015, 12:36am
UPDATED : Tuesday, 01 September, 2015, 10:22am

Liz Mak, Jun Mai and Kwong Man-ki

Li Yifei, country chairwoman of Man Group. Photo: Imaginechina

Beijing has tightened its grip on a financial market plagued by irregularities and left reeling from turbulence.

The latest effort involves the famous Chinese hedge fund manager Li Yifei, whose disappearance from public view in the past two days has prompted much speculation. Li is the chairwoman of the China unit of the Man Group, one of the world's largest hedge funds.

Bloomberg on Monday quoted a source as saying Li had been taken into custody by police to assist a probe into market volatility and her mobile phone had been switched off.

Li's husband, businessman Wang Chaoyong, denied the report. But he admitted his wife had been called to a special meeting with "relevant industry authorities" because of "the recent market volatility", mainland website Thepaper.cn reported.

"Foreign funds need to give information [to the authorities]. Because of the sensitivity of the meeting, all the participants must turn off their mobile phones and are not to contact the outside [without permission]," he told the website. The same day, Wang told another mainland news outlet, Caixin, that Li was at "a meeting in London".

In July, Beijing set up an investigation task force led by the Ministry of Public Security and financial regulators to crack down on illegal trading after a wave of panic sell-offs shocked domestic stock markets.

Wang said his wife was not responsible for the market rout. Bloomberg's report stressed the questioning of Li did not imply any wrongdoing.

A person familiar with the operation of foreign funds in China said it was most likely a fact-finding meeting for authorities to understand more about the operation of foreign hedge funds.

"I don't believe the move is to target foreign funds. It is normal for the regulators to call up some fund managers to understand what they are doing. The US and Hong Kong regulators are not polite either when it comes to short-selling activities," he said.

Rosanna Konarzewski, head of communications for Man Group, declined to comment.

Li is considered one of China's most powerful businesswomen.

Separately, Chinese financial journalist Wang Xiaolu and the stock market regulatory official Liu Shufan, implicated in a probe into suspected insider trading at Citic Securities, confessed on state television on Monday morning. Their appearance came hours after a midnight announcement that both men and four executives of the brokerage, including managing director XuGang, were being held.

Xu and three others, including executive committee member Liu Wei, head of the company's securities financing business Fang Qingli, and company director Chen Rongjie, had been criminally detained for suspected insider trading, Xinhua reported. In mainland law, "criminal detention" precedes formal arrest. Wang Xiaolu, of Caijing, had been accused of fabricating and spreading false information.

 

[Sabra]

Journalist, official held for stock market violation

Xinhua, August 31, 2015

Chinese authorities have held several people, including a journalist, an official of China's securities watchdog and four senior executives of China's major securities dealer for stock market violations.

Wang Xiaolu, journalist of Caijing Magazine, has been placed under "criminal compulsory measures" for suspected violations of colluding with others and fabricating and spreading fake information on securities and futures market, Xinhua learned on Sunday.

Wang confessed that he wrote fake report on Chinese stock market based on hearsay and his own subjective guesses without conducting due verifications.

He admitted that the false information have "caused panics and disorder at stock market, seriously undermined the market confidence, and inflicted huge losses on the country and investors."

Also put under "criminal compulsory measures" were Liu Shufan, an official with China Securities Regulatory Commission. He is held over suspicions of insider dealings, taking bribes and forging official seals.

According to Liu's confession during the investigation, he has taken advantage of his position to secure an approval from the securities authorities for a public company and help the growth of the company's shares.

In return, the head of the company offered bribes worth several million yuan to him.

Also, Liu has used insider information from the above-mentioned company and another company and obtained millions of yuan of illegal gains, according to his confession.

Liu confessed that he has forged official seals to fake a court ruling on divorce and taxation certificates for his mistress.

Xinhua also learned from authorities that Xu Gang, Liu Wei, Fang Qingli and Chen Rongjie, senior executives of the Citic Securities, China's leading securities dealer, have been put under "criminal compulsory measures" for suspected insider trading. They have also confessed to their violations.

"Compulsory measures" may include arrest, detention, issuing a warrant to compel a suspect to appear, bail pending trial, or residential surveillance.

 

[Sabra]

Mystery at Man Group: Source claims group's operations not being investigated ... but where is China chief Li Yifei?

Company's China chief Li Yifei was merely asked to assist in an investigation not related to the hedge fund, according to insider

PUBLISHED : Thursday, 03 September, 2015, 2:45am
UPDATED : Thursday, 03 September, 2015, 12:21pm

Liz Mak and Daniel Ren

Li Yifei's whereabouts remain unknown. Photo: Imaginechina

Four days after Li Yifei, country chairwoman of Man Group in China, disappeared from the public scene, an insider at the world's largest publicly traded hedge fund has come out to say there is no probe against Man Investments' operations on the mainland.

Li's whereabouts remain unclear. Her husband, Wang Chaoyong, earlier said Li was called to a special meeting with "relevant industry authorities".

He denied a Bloomberg report that claimed police took her away for questioning over the mainland's recent market turmoil. Wang could not be contacted yesterday.

The Man Group source, speaking on condition of anonymity, said : "Li did not disappear. She is around. The lady has been invited to help an investigation related to another party - not Man".

Li was understood to be in Beijing. "There is no investigation of Man," the source stressed.

Officially, the company sticks to a flat "no comment" to all questions related to Li.

But the source said the company was holding internal discussions and "may consider announcing a clarification to the public" after the meetings.

An official with the Shanghai Financial Service Office yesterday said the authority was "aware that an investigation is taking place" in response to the Post's inquiry about reports of Li's sudden disappearance. But officials were not authorised to comment further, he said.

Li's meeting with the authorities does not imply she is under formal investigation or has been involved in any wrongdoing.

Commenting in a private capacity, former China Securities Regulatory Commission deputy director-general Qiumei Yang, who is now ICI Global's Asia CEO, said there were no signs Chinese regulators were going after foreign funds.

Alex Werno - executive general manager at Fortune SG Fund Management and a member of the advisory committee of the Asset Management Association of China, the industry's self-regulating authority - said there had been increased scrutiny of funds, both foreign and domestic, since the market turmoil.

"Regulators have asked funds to stop all trades that could look like market manipulation," Werno said. "Most hedge funds are concerned about the case and are following the development very closely."

Aaron Boesky, chief executive of Marco Polo Pure Asset Management, said: "All of the problematic areas now related to short selling, 'malicious short selling' and margin financing were previously forbidden - they were opened only a year ago.

"If regulators don't like that, they shouldn't have opened these in the first place. The market was fine all these years without the developments."

 

[Sabra]

Chinese internet stocks trade lower in New York at midday

PUBLISHED : Saturday, 05 September, 2015, 1:43am
UPDATED : Saturday, 05 September, 2015, 1:43am

Agencies

Chinese shares in the US are lower as the overall market fell after the release of job data. Photo: AFP

US-listed Chinese internet stocks traded lower at lunch time in New York on Friday, as the overall market fell after the release of a mixed bag of job data.

Out of the 18 Chinese stocks, only Tal Education, an after-school tutoring agency, stood out with a 2 per cent gain. The rest sank with the market. The Nasdaq Composite was down 1.3 per cent at 4,672.73 points.

Online discount retailer Vipshop Holdings led the slide with a 5.4 per cent loss to trade at US$16.82. Vehicle portals Autohome and Bitauto Holdings followed with 4.51 per cent and 4.02 per cent decline respectively.

The US added 173,000 jobs in August, lower than expected. But the unemployment rate fell to a seven-year low at 5.1 per cent. The mixed data adds to the uncertainty over the likelihood for the Federal Reserve to raise interest rates later this month.

The Deutsche X-trackers Harvest CSI 300 China A-Shares ETF dropped 4.82 per cent to US$30.02. The BlackRock iShares China Large-Cap ETF lost 4.27 per cent to US$33.38.

 

[tanwahtiu]

when the West can trade in opium illegally at China door step, and refuse to stop despite the Hague Convention agreement, point these toxic stocks (if you want to call it) to the toxic westerner investors.

Westerners investors = toxic stocks

it's about time for tiongs and china sympathizers to suck on their thumbs.....anything tiong is toxic like turds.

http://finance.yahoo.com/news/china-slump-spreads-alibaba-sinks-144339569.html

 

[Sabra]

Mainland China revises down figure for 2014 GDP growth as foreign exchange reserves post biggest monthly fall on record

Question mark over support for yuan as GDP figure is lowered to 7.3pc and foreign exchange reserves post biggest monthly fall on record

PUBLISHED : Monday, 07 September, 2015, 1:46pm
UPDATED : Tuesday, 08 September, 2015, 2:15am

Agencies in Beijing and Shanghai

The Chinese authorities now believe the country's economy grew 7.3 per cent last year. Photo: AP

Mainland authorities yesterday lowered last year's growth figure, already the weakest in a quarter-century, days after worries about slowing expansion in the world's second-largest economy caused global stock market havoc.

China is a main driver of the world economy, its biggest trader in goods and a key market for commodities, so its troubles can have worldwide repercussions.

The National Bureau of Statistics said after a "preliminary confirmation" it had cut the 2014 GDP growth figure to 7.3 per cent from the 7.4 per cent announced in January. A final confirmation is expected in January 2016.

The new number remains the lowest since 1990, when expansion plummeted to 3.9 per cent.

China's foreign exchange reserves, the world's largest, shrank by $93.9 billion in August - the biggest monthly fall on record - to $3.557 trillion. Photo: Reuters

After decades of double-digit growth, Beijing is attempting a rebalancing from an investment- and export-led economic model to one where domestic consumer demand drives slower but more sustainable growth.

Finance Minister Lou Jiwei told a G20 meeting of finance ministers and central bank governors in Ankara at the weekend growth was expected to stay at "around 7 per cent" for "four to five years". The economy would go through "labour pains" over the next five years as Beijing completed the main structural reforms by 2020, Lou said.

Liu Dongliang, an economist with China Merchants Bank, said the GDP revision was expected, and downward pressure was likely to remain in "coming years".

Chinese Finance Minister Lou Jiwei (R) and Zhou Xiaochuan, governor of the People's Bank of China, at the G20 meeting in Ankara. Photo: Kyodo

"The economy is yet to hit the bottom. Current policies [will find it] hard to realise the 7 per cent GDP target, and policy effects [have not been as strong] as expected. A 7 per cent GDP target in coming years is not feasible as it would require continuous easing, which would result in debt accumulation, continuous leveraging and further overcapacity."

The mainland's foreign exchange reserves posted the biggest monthly fall on record in August, reflecting Beijing's attempts to halt a slide in the yuan and stabilise financial markets following its surprise move to devalue the currency last month. The mainland's reserves, the world's largest, fell US$93.9 billion last month to US$3.557 trillion.

The drop left market watchers questioning the sustainability of efforts to support the yuan, as capital outflows continue due to fears of a slowdown and the US raising interest rates.

Agence France-Presse, Reuters

Additional reporting by Wendy Wu

 

[Sabra]

Still no convincing answer from Man Group China chief over disappearance

Varying accounts from husband and wife add to confusion over episode

PUBLISHED : Tuesday, 08 September, 2015, 2:32am
UPDATED : Tuesday, 08 September, 2015, 2:32am

Liz Mak
[email protected]

Li Yifei, chairwoman of hedge fund Man Group China. Photo: Reuters

A week after the reported disappearance of Li Yifei, chairwoman of hedge fund Man Group China who reappeared in the public view via a post on Weibo and an interview given to mainland media outlet Caixin, there seem to be more questions than answers on the entire episode.

While some mainland media linked Li's disappearance with investigations into Citic Securities, Li and her husband have offered varying accounts to the media on her disappearance, adding to the confusion.

Li's husband Wang Chaoyong had been quoted as saying Li had gone to London as well as attending meetings with local "relevant regulatory authorities". In his first phone interview with the South China Morning Post on September 1, he said that Li was away at a conference on capital markets development and regulation.

At the time he said: "There are foreign as well as domestic institutions participating in this meeting. In Hong Kong, it is normal for regulatory conferences to go on for days."

"I am a CEO. She is a CEO, too. It is quite normal we don't see each other for days. I don't understand the source of all these new rumours," he said at the time.

On Sunday, Wang told the Post that Li had spent the previous week in meetings and that the couple had been visiting Sichuan to take a break.

In an interview with Caixin magazine the same day, Li said she was visiting a Taoist retreat after attending an industry conference.

"The meeting is already finished," Wang said. "We were together these last few days to have a holiday."

Li said on her microblog that she "had a good rest" during the break.

Man Investments declined to comment but sources close to Man, one of the world's largest hedge funds, denied the company's involvement with any official investigation in China.

Responding to mainland press reports that she had been questioned over her alleged involvement in certain trading activities, Li told Caixin: "Out of the question. Who would have the gall to short China's markets?"

Man Investments is an investment adviser to a Citic Securities product under its AHL brand. The company is one of many foreign brands with which Citic has business relationships.

The fund is estimated to have 1 billion yuan (HK$1.2 billion) in assets under management.

 

[Sabra]

Chinese stock exhanges plan to install bourse-wide ‘circuit breakers’ to prevent panic selling

A-share exchanges air plans for trading circuit breakers to prevent the massive swings that have left investors reeling in recent months

PUBLISHED : Monday, 07 September, 2015, 11:34pm
UPDATED : Tuesday, 08 September, 2015, 2:09am

Daniel Ren
[email protected]

Circuit breakers will stop trading in A-share markets. Photo: Reuters

Mainland stock exchanges plan to install bourse-wide "circuit breakers" to stop panic selling after botched official efforts to stop plunges in the volatile A-share market.

Beijing is also preparing to deleverage the market, determined to rid it of the speculative funds that helped drive the recent boom-to-bust share cycle.

The stepped-up intervention bodes ill for market reforms. Charles Li Xiaojia, chief executive of Hong Kong Exchanges & Clearing, said authorities were expected to delay the long-heralded Shenzhen-Hong Kong stock connect scheme.

Under the new plan, the Shanghai and Shenzhen stock exchanges will halt trading for 30 minutes when the CSI300 index that tracks the 300 biggest mainland-listed firms jumps or slumps 5 per cent in intraday trading. They will stop for the day if it soars or dives by 7 per cent, the exchanges said yesterday.

The circuit breaker system also applies to CSI300 index futures at the China Financial Futures Exchange in Shanghai.

The public will have until September 21 to give feedback on the idea.

The announcement of the circuit breakers came just a day after the China Securities Regulatory Commission said it was "studying" plans for such a system.

The exchanges said the decision was aimed at "maintaining market order, protecting investors' interests and boosting the long-term healthy development of the capital market".

Also yesterday, the Ministry of Finance announced that from today it would further cut the taxes investors pay on cash dividends from listed firms. It is part of Beijing's push to encourage long-term investment in stocks.

Beijing stepped in to put a floor under the plummeting stocks in early July after the benchmark index slid more than 30 per cent in three weeks. It suspended new share offerings, set up rescue funds and ordered major shareholders to bulk up share purchases.

But the intervention proved ineffective as the market headed down again last month, closing at 3,080.42 yesterday, 12 per cent shy of the pre-rescue-effort level.

Dragon Life Insurance fund manager Wu Kan said: "The regulators are willing to do anything to restore investor confidence."

The CSRC said it was launching a seventh round of investigations, looking into "market manipulators". It also said it had effectively cleaned up the grey financing market where an estimated 2 trillion yuan (HK$2.4 trillion) was illegally extended to retail investors to buy shares. Forced liquidations of accounts using the grey-market margin loans were believed to be the main weight on the share market.

Activity at official margin lending businesses also fell dramatically, with outstanding value at about 1 trillion yuan, down from the peak of 2.3 trillion yuan in June, the CSRC said.

"The efforts to deleverage the market are a double-edged sword," Shanghai-based hedge fund manager Dong Jun said. "They curb irrational buying … but also shut out fresh funds."

Beijing has not granted new foreign-exchange quotas for residents to invest in overseas equities since March.

The Shanghai stock exchange also said it would further restrict trading in exchange-traded fund options to ensure smooth operation of the options market.

 

[Sabra]

Chinese Premier Li Keqiang rejects economic quick fix in favour of reform

Quantitative easing won't solve structural imbalances, premier tells World Economic Forum

PUBLISHED : Thursday, 10 September, 2015, 1:06pm
UPDATED : Friday, 11 September, 2015, 1:41am

Wendy Wu in Dalian
[email protected]

Premier Li Keqiang speaking at the World Economic Forum. Photo: Reuters

Premier Li Keqiang has ruled out using quantitative easing as a policy to help stimulate growth in the world's second-largest economy, instead pledging reform and more entrepreneurship.

During his speech to the World Economic Forum yesterday in Dalian , Liaoning province, Li said quantitative easing alone could not solve structural problems in economic growth and it would lead to negative and spillover effects.

It was not the first time he had dismissed the possibility of strong stimulus, but his remarks, in the wake of the release of headline inflation figures, dashed hopes for an immediate move to reinvigorate the economy and signalled the leadership would stick to the long road to address imbalances.

Stock markets in the United States and across Asia rose on Wednesday on expectations that China might announce a new round of stimulus measures but the gains were wiped out yesterday.

Hong Kong's Hang Seng Index fell 2.57 per cent, reversing a 4.1 per cent gain on Wednesday. The Shanghai Composite Index closed down 1.39 per cent following the previous day's 2.44 per cent rise.

"There are still many tools in China's macro-economic policy toolbox, just like playing Go," Li said, referring to the ancient Chinese game.

The government was taking necessary and precise measures "aimed at narrowing short-term economic volatility and preventing it from spreading and exacerbating".

"Once there are signs the economy has slipped beyond the proper range, we will have sufficient ability to address risks. China won't see a hard landing in its economy," he said.

Earlier, the National Bureau of Statistics released a mixed price data report that showed the consumer price index rose 2 per cent last month, year on year, beating market expectations. The negative real interest rate - when inflation is greater than the nominal interest rate - will continue.

Bureau data also showed the producer price index fell at its fastest monthly clip in six years, at 5.9 per cent, indicating lingering pressure of overcapacity and insufficient demand.

Higher or lower economic growth was acceptable as long as employment and residential income remained strong and environmental protection efforts improved, Li said.

The government had refrained from flooding the system with money but instead relied on reforms to offset slower economic growth, he said, adding measures had already started to take effect.

Fu Bingtao, an economist at the Agricultural Bank of China, said the government was less worried about short-term indicators and more concerned the broader situation was within its expectations.

"It doesn't matter whether GDP slows to 6.8 per cent or 6.5 per cent. The key is at which level the economy would stabilise. We care about long-term performance, such as the progress of structural changes and whether risks can be controlled," Fu said. The government's target for 2015 growth is 7 per cent.

Lin Boqiang, dean of the China Institute for Studies in Energy Policy, said on the forum sidelines that the biggest challenge was to ensure economic reforms continued to move forward, although the speed of progress might slow as the government needed to stabilise growth.

The ability of local governments to help bolster the economy would remain limited as they were heavily encumbered by debt, Lin said. They were expecting Beijing to step up infrastructure spending in the short term to breathe life into the economy and help enterprises maintain profits.

Li also said the government would open the domestic currency market to overseas monetary authorities, allowing them to buy or sell through the interbank mechanism. Beijing would also establish a cross-border yuan payment system by year's end.

"The arrangement indicates Beijing's resolution to respect market forces to decide the yuan's exchange rate and attract more foreign agencies to participate in the yuan's central parity formation," Fu said.

Huang Yiping, a member of the monetary policy committee of China's central bank, said there was no need to be too concerned about the yuan's value. It was more important to ensure the renminbi targeted a basket of currencies instead of returning to the US dollar peg.

 

[Sabra]

Crackdown on Chinese stock market meltdown trades exposes faults in the system

Three mainland executives are investigated for allegedly exploiting regulatory loopholes to net billions through irregular futures transactions

PUBLISHED : Monday, 02 November, 2015, 11:44pm
UPDATED : Monday, 02 November, 2015, 11:44pm

Wendy Wu
[email protected]

Innovative products were introduced without adequate risk management. Photo: Reuters

A government crackdown on allegedly illegal high-frequency trades during the summer's stock market meltdown has highlighted loopholes and the need for better oversight of the system.

The Ministry of Public Security said on Sunday that it had arrested two executives from Jiangsu-based and Hong Kong-owned fund Yishidun for allegedly pocketing billions of yuan from irregular futures trades by using software in June and July that in some cases took only one second to buy 31 contracts.

Yishidun general manager Gao Yan and senior executive Liang Zezhong were both arrested for allegedly buying and selling futures in prices that deviated from market standards and illegally made more than 2 billion yuan (HK$24 billion), Xinhua said. Jin Wenxian, a technical executive with China Fortune Futures, was also arrested.

The trades allegedly took place as the authorities, including the central bank, scrambled to pull the stock market out of a death spiral with massive intervention. The benchmark Shanghai Composite Index fell below 3,000 in late August from an all-time peak of 5,166 on July 15.

Renmin University economist Zhao Xijun said the crisis and the clumsy official response exposed the lack of effective regulation of new financial products and transactions. "[The crisis was a result of] transplanting a market mechanism and approach from the United States into a Chinese reality," Zhao said.

"[The regulators] introduced innovative products, such as stock index futures, margin trading and short selling, but the risk management was not in place and responsibility was divided among different authorities, leaving loopholes."

High-frequency trading is a popular high-speed automated transaction method in the US and Europe. It is relatively new but gaining popularity in China, used mainly in transactions involving stock index futures, short selling and exchange-traded funds.

"As long as it is not banned by regulators, we can use high-frequency trading. But once it causes abnormal market movements, the regulators will intervene," an executive with a Shenzhen brokerage firm said.

Before the summer there were no rules covering high-frequency trading on the mainland, leaving the way open for some to exploit loopholes. Photo: EPA

Before the summer there were no law or rules covering high-frequency trading on the mainland, leaving the way open for some to exploit loopholes.

Gao, Liang and Jin were suspected of using others' futures accounts, transferring funds overseas via underground banks, and using high-frequency software developed overseas to invest in and manipulate the stock market, Xinhua said.

It was not until October 9 that the securities watchdog unveiled draft rules to govern high-frequency trading, including a net daily purchase quota and information disclosure requirements.
Read more: Beijing investigates senior figure at China’s state securities regulator in latest step to crackdown on market irregularities

Zhou Jianhua, a strategist with Central China Securities, said China's oversight of automated and insider trading was not on par with regulatory regimes in place elsewhere.

"But the direction of regulation is correct. The regulators have to clean up the foul play in the market and rats in the regulatory body before setting up rules governing financial transactions," Zhou said.

The China Securities Regulatory Commission said on July 31 that it limited transactions on 24 accounts which frequently submitted bids for shares and bid cancellations that were suspected of affecting transaction prices.

 

[Sabra]

Police arrest China's 'No 1 hedge fund manager' in insider trading investigation

Investment wizard likened to Warren Buffett is latest casualty in probe of market irregularities

PUBLISHED : Tuesday, 03 November, 2015, 12:11am
UPDATED : Tuesday, 03 November, 2015, 12:11am

Daniel Ren
[email protected]

Xu Xiang during his arrest on Sunday. He had been likened in China to Warren Buffett. Photo: SCMP Pictures

Police and regulators have had their eyes on Xu Xiang, general manager of Zexi Investment and regarded by many as China's No1 hedge fund manager, ever since the losses caused by the chaos in mainland stock markets this summer climbed into trillions of dollars.

And now they have pounced. Xu and several other executives of Zexi were arrested on Sunday on charges including insider trading and stock market manipulation, Xinhua reported yesterday, citing the Ministry of Public Security.

Many had thought Xu was in the clear after an earlier interrogation by regulators over suspicious trades following the boom-to-bust cycle in the A-share market in mid-June.

The detention of Xu, whose aura on the mainland is akin to that of Warren Buffett in the West, is the latest crack to appear in the country's securities industry - cracks that have been appearing despite Beijing's efforts to bolster investor confidence.

A fund manager said Xu was well-connected with senior government officials and a "cunning" asset manager who could fully take advantage of regulatory loopholes to profit.
Read more: Crackdown on Chinese stock market meltdown trades exposes faults in the system

"It was widely believed that he was safe after being interrogated," the fund manager said. "He understands the rules better than any other fund manager and it should have been difficult for police to spot his illegal behaviour."

Zexi's hedge funds recorded at least 140 per cent growth in net asset value this year, making the company controlled by Xu the standout performer in the mainland's securities industry.

"He was viewed as the best of the best before the investigation into him was announced," said Zhou Ling, a hedge fund manager at Shanghai Shiva Investment.

"His detention shows there is no God in this market at all.

"It was the inside information and conspiracy that helped him to make a killing."

The benchmark indicator jumped nearly 120 per cent between October 2014 and mid-June 2015 before slumping more than 32 per cent in three weeks.

Beijing shelled out more than 1 trillion yuan (HK$1.22 trillion) in rescue funds to underpin the falling market, but in vain.

In recent months, more than a dozen powerful industry figures including Zhang Yujun, an assistant chairman of the China Securities Regulatory Commission, and Cheng Boming, president of Citic Securities, the mainland's largest brokerage, have been taken away for investigation.

Zhang Yujun, assistant chairman of the China Securities Regulatory Commission, has been taken away for investigation. Photo: KY Cheng

Meanwhile, Beijing has placed responsibility for the market rout on a handful of government officials and key market players.

Since July, mainland police have been investigating what officials describe as "malicious short-selling".

The move is part of a widespread crackdown on market irregularities targeting corrupt regulatory officials and unethical fund managers.

In late September, Zexi Investment said it did not even own a stock-index futures account for short selling.

Xu's rags-to-riches tale inspired hundreds of securities industry employees in China.

After graduating from high school, he turned his attention to stocks in 1993 with an initial investment of 30,000 yuan. Mainland media estimate he is now worth billions of yuan.

 

[NoLimit]

Questions mount over Chinese billionaire hedge fund manager's big stock picks

Company reports show Xu Xiang's hedge funds had big holdings in A-share rescue targets

PUBLISHED : Wednesday, 04 November, 2015, 12:12am
UPDATED : Wednesday, 04 November, 2015, 12:53am

Daniel Ren
[email protected]

Zexi Investment founder Xu Xiang was arrested on Sunday. Photo: SCMP Pictures

The uncanny parallels between billionaire Xu Xiang's stock picks and the targets of government rescue funds have added weight to suspicions about widespread collusion linked to the A-share market's roller-coaster ride over the summer.

Xu was arrested on Sunday over suspected insider trading and market manipulation. His hedge funds had several large holdings of stocks that were chased by an institution distributing government rescue funds, according to data in the listed firms' quarterly reports.

Xu, 37, founder and general manager of Zexi Investment, has been lauded on the mainland for his investment decisions.

As the benchmark indicator sank 35 per cent in three weeks from mid-June, five of Zexi's funds reported at least 20 per cent growth in net asset value. At least three of Zexi's heavily held stocks - real estate developer Deluxe Family, Shanghai Metersbonwe Fashion & Accessories and Eastern Gold Jade - became darlings of China Securities Finance Corporation, the platform the government used to stem a sharp fall to bolster investor confidence.
Read more: ‘China’s Warren Buffett’ mocked by internet users after he is arrested in ‘doctor's jacket’

Xu's arrest comes as investigations continue into the activities of more than 10 Citic Securities officials, including president Cheng Boming.

"Xu's detention has fuelled speculation that Zexi colluded with some of those who managed the rescue funds to make illegal profits," hedge fund manager Dong Jun said. "It would be naive for people to believe the [market] synergy was only a coincidence."

The Ministry of Public Security established a special task force in early July to look into suspicious trades described as "malicious short-selling".
Read more: Zexi Investment's Xu Xiang: The self-made man with the Midas touch

The market has been rife with conspiracy talk since the death spiral that wiped nearly US$5 trillion off the value of mainland stocks.

In late August, state-owned Securities Daily said some managers of the rescue funds had colluded with foreign investors to take advantage of the more than 1 trillion yuan (HK$1.22 trillion) pumped into the system by the government.

Zexi was forced to deny one market rumour that Xu worked with Citic Securities to use the rescue fund to rig the price of Metersbonwe.

Xu and his subordinates at Zexi are known for their bold investment strategies.

Zexi would often chase stocks that rose to the 10 per cent daily trading limit, a risky move given the high chance of profit-taking.

"They are a one-of-a-kind hedge fund group," Dragon Life Insurance fund manager Wu Kan said.

"They are either heroes or villains, but they did have a big impact on the market."

 

[Sabra]

Top official at China's securities watchdog caught in anti-corruption crackdown

CSRC vice-chairman Yao Gang was one of the officials responsible for stabilising the market

PUBLISHED : Friday, 13 November, 2015, 8:58pm
UPDATED : Friday, 13 November, 2015, 11:58pm

Staff Reporter

Yao Gang, vice-chairman of China Securities Regulatory Commission, made his last public appearance on November 7, when he attended a risk management and agriculture forum in Fuzhou, Fujian. Photo: SCMP Pictures

The mainland's anti-graft watchdog has netted the most senior securities regulator to date in a broad crackdown on the financial sector in the wake of the summer's stock market meltdown.

Yao Gang, vice-chairman of the China Securities Regulatory Commission, was under investigation over suspected "serious violation of party discipline" - a euphemism for corruption, the Central Commission for Discipline Inspection said on Friday night.

Yao, 53, was one of the commission's most senior officials, second only to chairman Xiao Gang. He was in charge of initial public offering approvals before moving to oversee the bond and futures sectors earlier this year.

"It's kind of score settling after the stock market rout," one dealer said. "Yao was in charge of IPOs. And the IPO approval sector was quite corrupt."

Another trader from a mid-sized bank in the mainland's east said Yao's sacking was the result of "internal politics". The trader said there had been rumour since Wednesday that Yao was under investigation for insider trading and more officials might fall.

The market rout triggered fears of a financial crisis, prompting Beijing to step in to restore investor confidence. More than 1 trillion yuan (HK$1.2 trillion) in rescue funds was thought to have been pumped in to stop the crisis.

Yao was one of the officials responsible for stabilising the market, Caixin reported. Others include Zhang Yujun, the CSRC's former assistant chairman overseeing brokerages and fund houses who was put under investigation in September.

More than 10 officials at Citic Securities, the mainland's largest brokerage, were also investigated, with its president Cheng Boming being questioned by police for alleged insider trading.

The CCDI sent inspectors to the commission last month.

Peking University governance professor Zhuang Deshui said the authorities stepped up anti-graft efforts in the financial sector to try to boost investor confidence and remove vested interests seen as hindering financial reform. "The government has launched a series of measures to stabilise the market … [but it] is still volatile," he said. "The stock market rout is a curtain raiser for anti-corruption efforts in the financial sector."

Yao started working for the CSRC in 1993, as deputy head of the securities department. In 1999, he moved to Junan Securities, before returning to the CSRC in 2002. He became the CSRC's vice chairman in February 2008.

Yao had a reputation for pragmatism, Caixin reported.

 

[Sabra]

Three big failures sent China’s stock market on a crash course: report

Investors, regulators and the media must all share blame for the market rout that wiped out trillions of yuan in value, a semi-official report says

PUBLISHED : Saturday, 21 November, 2015, 12:43am
UPDATED : Saturday, 21 November, 2015, 12:43am

Zhou Xin
[email protected]

Any real change to the securities system is a long way off, according to Beijing Institute of Technology economics professor Hu Xingdou. Photo: Xinhua

Investors borrowed too much to speculate on shares, regulators were too incompetent to see the crisis, and the media failed to remind the public about risk.

Those were the causes of the mainland’s summer stock market rout, according to a 300-page report by three high-profile financial figures in Beijing.

Instead of blaming a few individual “bad guys” for the crash, the first semi-official report gives a comprehensive overview of the systematic failures that sent the benchmark Shanghai index tumbling over 30 per cent in four weeks. The spectacular collapse not only wiped out trillions of yuan of market value in just a few weeks but also triggered doubts about the ability of the leadership to manage the economy.

Mainland authorities have detained various people they suspect as responsible for the rout. Yao Gang , former vice-chairman of the China Securities Regulatory Commission, is the latest to come under investigation. Cheng Boming, the president of Citic Securities, hedge fund billionaire Xu Xiang and Caijing magazine journalist Wang Xiaolu are among dozens of people who are in the spotlight for alleged inside trading and other offences.

But the real causes of the crisis go well beyond the misconduct of any individual, according to Wu Xiaoling, a former central bank vice-governor and now a financial legislator; Central Huijin Investment vice-chairman Li Jiange; and Wang Zhongmin, a deputy chairman with the National Council for Social Security Fund.

“The excessive and chaotic application of leveraged buying, and lax regulation over financial products, prevented Chinese regulators from effectively monitoring and quantifying stock market risks, and that’s the most important reason for the stock market swing,” the three authors wrote in a report put out by Tsinghua University’s National Institute of Financial Research.

“Both state media and market-oriented media organisations, failed to play their watchdog role,” it said. “Media reports directly fanned expectations of an ever-rising stock market.”

The absence of a circuit-breaker, the 10 per cent price movement daily limit, and a system that discouraged short-selling all contributed to the A-share market’s woes, the report said.

The report also made a series of policy suggestions, including expanding the CSRC’s regulatory role and establishing a national capital market crisis management mechanism.

Beijing Institute of Technology economics professor Hu Xingdou said any real change was a long way off.

“On the surface, Beijing has started to arrest a lot of people and is striking hard on irregularities,” Hu said. “But the government hasn’t really tackled any institutional issues in the stock market since the rout.

“Some people say China’s stock market is like a casino, and others say it’s worse than that.

“It will take many years for that perception to change.”

 

[Sabra]

China markets shut down for second time this week by circuit breaker; Hong Kong and Asian stocks reel from turbulence

Shanghai and Shenzhen markets trade for grand total of 13 minutes before sell-off triggers circuit breakers; HSBC analyst says Beijing may adjust circuit breaker rules

PUBLISHED : Thursday, 07 January, 2016, 9:01am
UPDATED : Thursday, 07 January, 2016, 8:43pm

Laura He and Xie Yu
[email protected]

An elderly investor looks on with concern at the stock chart board at Shanghai this morning. Photo: Xinhua

Chinese stocks halted trading for the rest of the day on Thursday for the second time this week as a 7 per cent plunge in the CSI300 index triggered a circuit breaker less than half an hour after markets opened for business.

The rout spilled over into Hong Kong and other major Asian markets, which fell heavily across the region amid fears over the volatility in China’s equity markets during the first trading week of 2016.

Mainland China’s benchmark Shanghai Composite Index ended down 7.3 per cent at 3,115.89, after trading for only 13 minutes on Thursday. The index has fallen 12 per cent so far this year, wiping out all the gains for 2015 when it rose 9.4 per cent on the year.

The large-cap CSI300 closed down 7.2 per cent at 3,284.74.

Hong Kong markets fell sharply after trading in China ended abruptly, with the Hang Seng Index ending at the lunch break on Thursday 2.4 per cent lower at 20,479.39. The Hang Seng China Enterprises Index, or the H-shares index, slid 3.4 per cent to finish at 8,827.78.

Other Asian markets also declined, as Tokyo’s Nikkei Average lost 1.7 per cent, Sydney’s S&P/ASX200 skidded 2.1 per cent, and Seoul’s Kospi Composite Index moved down 0.9 per cent.

“Investors are being spooked by the functioning of the new circuit breaker mechanism and the downward pressure on the renminbi,” said Tom Rafferty, Asia economist for The Economist Intelligence Unit in Beijing.

“The authorities staked a huge amount on propping the markets in mid-2015 - an unwise decision given stocks appeared grossly overvalued - and we are now seeing the situation unravel again,” he said.

HSBC analyst Steven Sun said in a report Beijing will likely change the way the circuit breaker works.

“We expect the circuit breaker to be refined in the coming months to help protect rather than squeeze out market liquidity,” he said.

“Hopefully, this will include a higher threshold to trigger market suspension or complete halt, or a shorter time period for a market halt or a combination of both.”

Trading in Shanghai and Shenzhen markets was suspended for first time at 9:42 am when the CSI300 index dropped more than 5 per cent. It took just another minute for the market to fall by a total of 7 per cent when trading resumed at 9:57 am, triggering the second stage of the circuit breaker which closed all trading for the day in both markets.

On Monday, share markets in China shuttered trading for the rest of the session by the circuit breaker at 1:33 pm, also following a 7 per cent slide in the CSI300 index. At that time, trading lasted for a little more than two hours in total.

China’s government is now faced with a choice of “either doubling down on the supportive measures they’ve been implementing for equities over the past six months or relenting to market pressures,” Rafferty added.

Sun said the A-shares fell over 5 per cent intraday on 33 occasions and over 7 per cent intra-day 11 times in 2015. The circuit breaker rule currently in place in China stops trading for 15 minutes if the CSI300 Index moves 5 per cent. All markets then shut if the CSI300 moves a total of 7 per cent when trading resumes.

Some analysts said Hong Kong markets may suffer from the spillover effect of the turbulence in Chinese equity markets.

“Hong Kong is like an ATM, and when you cannot sell on the mainland, you cash out freely here,” said Louis Tse Ming-kwong, director of VC Brokerage.

He added a lot of short positions had been built in Hong Kong in the previous months, based on a bearish outlook for the mainland economy and a weakening currency, and now “they are making (a) killing”.

Tse also noted the next support level for the benchmark Hang Seng Index would be around 20,300, but he forecast the market might fall further than that.

Concerned investors wait for news at the Shanghai stock market. Photo: Xinhua 新

At 11:20 am, Hong Kong’s Hang Seng Index was down 2.4 per cent, or 510.30 points, to 20,470.51.

The mainland markets had finished Wednesday’s trading with the biggest gain in three weeks, after the authorities intervened by propping up the markets.

The Shanghai Composite Index advanced 2.3 per cent on Wednesday to close at 3,361.84.

Asian markets were hit by the Chinese shutdown.

Overnight, the US markets plunged with oil prices sinking to their lowest level in 11 years on concerns over rising geopolitical tensions and a persistent glut in the energy market.

The Dow Jones Industrial Average finished down 252.15 points, or 1.3 per cent, at 16,906.51 – its first close below 17,000 since October.

The S&P 500 Index slid 26.45 points, or 1.3 per cent, to 1,990.26, its first close below 2,000 since mid-October.

 

[HACKED]

i lost a pile

 

[Sabra]

China’s stock market turmoil mocked online after trading suspended for second time in week

PUBLISHED : Thursday, 07 January, 2016, 1:27pm
UPDATED : Thursday, 07 January, 2016, 3:57pm

Gloria Chan
[email protected]

North Korean leader Kim Jong-un finds news of the stock trading suspension hilarious in a mocked up picture shared on the internet in China. Photo: SCMP Pictures

A circuit breaker was triggered for the second time this week on Thursday to halt trading on mainland China’s stock exchanges after sharp falls in prices and internet users have been sharing jokes and taking a wry look at the chaotic trading on the nation’s share markets.

One internet user jested about the working hours of stock traders: “Working in the stock exchange industry is so great, no other industries can compare. You earn a lot during a bull market and you get off work early during a bear market.”

Another blogger took up the same theme saying finding a boyfriend who works in the stocks industry would be great. “[He’ll] go to work for 15 minutes, then keep you company for the rest of the day,” she joked.

Memes were circulated online

Another internet user posted a picture of the North Korean leader Kim Jong-un, flanked by aides, pointing at a television report about the circuit break and celebrating the market suspension rather than his country’s development of the hydrogen bomb.

One web user said a circuit breaker should be made a national policy and a more regular event, especially after the one-child policy ended on January 1.

One of many memes posted today about the suspension of China’s stock market

It would mean the elderly, who normally spend their days monitoring the stock market glued to their computers, would spend more time with their children and grandchildren, doing the cooking and household chores.

Deng Xiaoping was jokingly “quoted” as saying stock exchanges could face the axe in China by one internet user. Photo: SCMP Picture

Another internet user posted a picture of Deng Xiaoping, with the former leader taking a wry line on the market turmoil.

“A capitalist society can have stock markets, a socialist society can do it, too. We have to persevere and try. If we fail to do it, well, we can always shut it down!”

Patrick Stewart as Captain Jean-Luc Picard in Star Trek

The loose quote was taken from a book in which Deng is quoted as saying that even a socialist society can try its hand at running stock markets.

 

[eatshitndie]

tiong stock market lao sai until kar chng painful....

https://finance.yahoo.com/news/china-stocks-trading-halted-rout-023219822.html