China's stock market has been facing pressure for the last few years. Even after government intervention, it is not possible to control the market. In such a situation, the Chinese government has now imposed restrictions on all institutional investors including foreign investors. This is being said to be the most drastic step taken so far.
Measures being taken to control the market
According to a Bloomberg report, the Chinese government is planning to sell its stock market worth $8.6 trillion. It is taking every possible measure to save it. There is no going back even after taking the toughest steps for this. In this context, now almost all major institutional investors in China have been banned from selling their holdings at the beginning or end of the trading day. Institutional investors include FPIs and DIIs.
The regulator created this task force
China's market regulator China Securities Regulatory Commission has issued an order in this regard. The Bloomberg report, quoting sources related to the matter, said that the regulator has sent orders to the proprietary trading desks of major asset managers and brokers and asked them to execute them. The regulator has also created a task force in collaboration with stock exchanges, which has been tasked with monitoring short selling and sending notices to companies making profits in this way.
Recession dominates China's market.
Actually, both opening and closing are important times for the market, which determine the entire outline. For some time now, it has been seen in the Chinese market that generally big investors (institutional investors) are making profits by selling more shares than they bought at the time of opening and closing. Due to this, recession is dominating the market.
Foreign investors will be affected in this way
After the latest action of the government, it will not be possible for institutional investors to sell more shares than the purchased shares, Because now they cannot become net sellers during the half-hour of opening or closing time. In such a situation, China's government funds will have the opportunity to determine the direction of the market. Foreign investors will be most affected by this restriction, because most of China's domestic institutional investors are government-backed funds.
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