Beijing starts blame game

Faced with a renewed stock market slide that has wiped out €4.4tn in trading value, China is again on the prowl for scapegoats.

Authorities announced a probe of allegations of market malpractice involving the stocks regulator on Tuesday, while the official Xinhua News Agency called for efforts to “purify” the capital markets. The news service also carried remarks by a central bank researcher attributing the global rout to an expected Federal Reserve rate increase.

The Shanghai Composite Index has plunged more than 40% from its peak, after concerns over the Chinese economy helped snap a months-long rally encouraged by state-run media. Authorities have repeatedly blamed market manipulators and foreign forces since the sell off began in June and led officials to launch an unprecedented stocks-support programme.

Now, after suspending that programme, the administration has embarked on a new round of allegations and fault-finding.

“The authorities have been too involved in the stock market and now they’re trying to pass the responsibilities to others,” said Hu Xingdou, an economics professor in Beijing.

“In fact, they have to be responsible for the market crisis. It’s the authorities trying to act like a referee and a player at the same time.”

Police are probing people connected to the China Securities Regulatory Commission, Citic Securities and Caijing magazine on suspicion of offences including illegal securities trading and spreading false information, Xinhua reported.

They’re probing suspects linked to the CSRC, including a former employee, over insider trading and forging official document stamps, Xinhua said. Eight people at Citic Securities are suspected of illegal securities trading and the Caijing employees are under investigation for allegedly fabricating and spreading fake stock and futures trading information.

Citic Securities said yesterday, in a statement posted to the Shanghai stock exchange, that it hasn’t received notice related to the report and said the company’s operating as normal. Caijing confirmed a reporter had been summoned by police. The magazine said it didn’t know the reason and would co-operate with authorities.

Meanwhile, Xinhua published a commentary urging stricter enforcement to cleanse the markets.

Bloomberg