China is trying to win back investors who fled last year. Chinese stock market falls 13% in 2023 real estate has hemorrhaged further in the new year amid multiple crises, including a persistent decline in foreign sales and an unsteady economic recovery. The first move to get the country’s economy back on track came from the People’s Bank of China, which kept interest rates unchanged at 3.45% for the sixth consecutive month.
Now, the Beijing Government is finalizing various measures, such as a 255,000 million euro package to stop the collapse of capital markets before the celebrations begin. Chinese New Year is a special period of volatility in stock markets. At the same time, Chinese securities regulators asked hedge funds to restrict short selling in stock futures markets, according to two sources consulted by Reuters.
Shanghai’s CSI 300 index fell to its lowest levels in almost five years this week, prompting government action to stabilize capital markets.
No official comment from regulators
China Financial Futures Exchange (CFFEX) and China Securities Regulatory Commission (CSRC)person who controls the stock market They declined to comment with Reuters About their request to investment funds not to take bearish or short positions in the Chinese stock market. Regulators did not elaborate on specific restrictions in their unofficial guidelines but hinted that short-selling activity using stock index futures would be limited, according to the same two sources cited by the news agency.
CSRC chairman Yi Huiman on Tuesday He pledged to maintain the stable functioning of markets With all the power of capital. China’s State Council, or cabinet, has also promised stronger and more effective measures to bolster market confidence.
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Futures contracts on the small-cap CSI 1000 index expiring in September 2024 traded 8% below the underlying index on Monday, falling to a daily high of 10%. The turnover of futures contracts also increased rapidly.
Heavy selling of stock index futures was driven in part by risk management activities; because billions of dollars of losses in derivatives tied to Chinese stock indexes have caused a vicious cycle of selling stocks and futures contracts.