China believes market manipulators may be behind the huge crash in the nation's stock market

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Having presided over what many deem to be a government-orchestrated bull market over the past 12 months, China’s stock market regulator, the CSRC, announced earlier today that they have opened an investigation into suspected market manipulation amidst a sharp selloff in Chinese stocks.

The China Daily, a Chinese state-run newspaper, said on Friday that the CSRC was probing investors who used stock index futures to “short” the market, or bet on prices falling, according to a report from Reuters.

Citing unnamed sources, Reuters also reported that China’s financial futures exchange temporarily suspended 19 accounts from short-selling before trading resumed on Friday.

Despite the news, the probe into market manipulation has done nothing to stop the carnage in stocks. At the midday break in Friday trade, the CSI 300, an index of the 300 largest firms listed on the Shanghai and Shenzhen exchanges, has lost an additional 2.40%. The index has now fallen over 25% since June 9.

To counterbalance the manipulation argument, the index is still up 83.5% over the past 12 months.

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