China’s stock market sell off accelerated in afternoon trade today as news that the regulator’s probe into securities firms shook trader’s confidence. The composite index in Shanghai is down 4.39% to 3,475.
Earlier in the day stocks were already under pressure after the release of Chinese industrial profits, which fell 4.6% over the past 12 months, a sharp acceleration in the decline after last months 0.1% fall.
Selling really accelerated in post-lunch trade after both Reuters and Bloomberg reported the regulator was investigating a number of securities firms.
Quoting sources, Reuters said that China Haitong Securities is under investigation by the regulator of “alleged violations of security regulations.”
Separately Bloomberg said that both Citic Securities and Guosen Securities had fallen more than 7% on market “after saying they were under investigation for alleged rule violations.”
Earlier this week we reported that the chairman of Citic Securities had been ousted because he failed to stop insider trading.
Zhang Haidong, chief strategist at Jinkuang Investment Management in Shanghai, told Bloomberg that:
The regulator will probably further step up oversight and crack down that area. In the short term, the market will be pressured by that.
That pressure has already hurt stocks in Asia today and could impact European and US markets tonight.
Here’s the latest daily chart of the Shanghai Composite Index:
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