China Bans Stock Sales by Major Shareholders for Six Months

[Purveyor]

Source: Bloomberg

by Ye XieBelinda Cao
July 8, 2015 — 8:10 AM EDT
Updated on July 8, 2015 — 9:19 AM EDT

China’s securities regulator banned major shareholders, corporate executives and directors from selling stakes in listed companies for six months, its latest effort to stop the nation’s $3.5 trillion stock-market rout.

Investors with stakes exceeding 5 percent must maintain their positions, the China Securities Regulatory Commission said in a statement. The rule is intended to guard capital-market stability amid an “unreasonable plunge” in share prices, the CSRC said.

While China has already ordered government-owned institutions to maintain or boost their stock holdings, the CSRC’s directive expands the ban on sales to non-state companies and potentially foreign investors who own major stakes in mainland businesses. Regulators have unveiled market-boosting measures almost every night over the past 10 days, steps that have so far failed to revive investor confidence. Foreign traders sold Chinese shares at a record pace this week in part due concerns over the government’s meddling in markets.

“This is not something that would happen in the U.S. or in any other developed market,” said Brian Jacobsen, who helps oversee $250 billion as the chief portfolio strategist at Wells Fargo Funds Management. “It does smell a little bit of desperation. But in China it’s a very unique system and they are taking unique steps to try to stop the drop.”

Read more: http://www.bloomberg.com/news/articles/2015-07-08/china-bans-stock-sales-by-major-shareholders-for-six-months

[snooper2]

1. That's going to work out just great for them

[Purveyor]

2. I'm not sure what to expect but lots of worldly financial happenings currently taking place, indeed.

[onehandle]

3. Fake Capitalism reveals its true face. nt

[Kelvin Mace]

8. And it is just as corrupt as real capitalism

Go figure...

[vinny9698]

4. All insider trading.

Just like the US it is all insider trading. I took a finance MBA class and our instructor showed us the legal but unethical tricks to make a profit on the stock market. Brokers use churning to buy and sell their clients stocks to make a profit off the commission and fee on each transaction. Dumping money market to put the client into another money market that offers the broker a high commission up front. Executives not replying to negative financial reviews but allowing the stock to go down on the negative reviews. Then the executives buy a lot of stock, on the lower price. They then aggressively defend the stock and prove where the reviewer or try to prove the reviewer is dead wrong. Stock price go up, kaching money in the pocket.
All perfectly legal and used everyday to fleece the retail investor.

[valerief]

5. Interesting. I guess when you own Congress, you can legalize anything. nt

[PSPS]

6. It's called "doing a Louis Rukeyser."

[Kelvin Mace]

9. That's why I avoid managed funds

and stick to DRiPs. Buy and hold.

[melm00se]

11. which is why

if you must do business with a full service broker, you monitor them like a hawk, never grant them any power to act unilaterally in your stead but rather they can only execute transactions upon your explicit instructions or better yet hire a fee only planner and control your own destiny via a discount broker service.

[closeupready]

13. Oh yeah. Regulators aren't the brightest bulbs.

Many fortunes have been made doing unethical stuff that was perfectly legal at the time it was done. The perps make out like bandits, a law is passed to stop it from happening again, regulators appointed to enforce this law, and the perps create a new Ponzi scheme, a scheme which is designed to run rings around the new laws. Rinse, repeat.

[global1]

7. Could This Move By China Be The Reason For The NYSE Being Down?...

Is a computer glitch on NYSE just a cover story?

Greece, European Union, China - a lot of financial issues converging.

Is too big to fail coming into play?

Hmmmmm........

[still_one]

10. Not at all. The NYSE is a technical computer issue, and not hacking. The other exchanges are

operating fine this morning.

I think the move by China will cause a loss of credibility in their stock market. A few days is one thing, but 6 months is not a free exchange, especially in light of the real problems which were the Chinese exchanges allowing over extended margin trading. That is the real issue, and until that works out of their system, it won't bottom out

[BlueEye]

14. The big banks, hedge funds, and brokerages want more liquidity, not less.

So I don't see how covertly freezing the market would help them.

Now a Chinese cyberattack to suspend American trading as their market free-falls might make sense, except 1) NYSE explicitly denied a cyberattack, and (more importantly) 2) Not a single other market in the U.S. or abroad suffered such an incident. Unless the DoJ or FBI say this was intentional, it does appear to be just an IT snafu.

[samsingh]

12. must be nice to just change rules so quickly

[not fooled]

15. The US Version of what China is doing...

...Would be if the 'pukes and their stooges in the Democratic Party can force Social Security funds into Wall Street hands. Voila--a captive audience of forced shareholders.

USA! USA!

Anyone that depends or will depend on Social Security who votes for Jebbers--when he has clearly stated his intention to privatize Social Security--is a moron. Of course, unfortunately the same caution applies to those of today's "Democrats" who would sell out Social Security as readily as they sold out the American worker a la TPA/TPP.