China Punished 197 People for Stock Market MeltdownPosted: August 31, 2015
I pointed out the Chinese government’s ability to deal with stock market meltdown and gave the advice not to fight against a rich and powerful government in stock market in the following five posts:
Do Not Fight against Rich and Powerful Government in Stock Market dated July 29
China Punishes Short-sellers to Support Its Stock Market dated August 1
Stock Market Crash, a Golden Opportunity for CCP to Win Popularity dated August 6
Do Not Fight against Rich and Powerful Government in Stock Market 2 dated August 26
China Xi’s Iron Fist in Dealing Blows at Stock Market Irregularities dated August 27
True enough, according to Reuters’ report “Nerves on edge as Chinese authorities probe market mayhem” today, China has punished 197 people and will punish more through investigation for short selling and writing to push down the market in Chinese media. The following is the full text of Reuters’ report:
Nerves on edge as Chinese authorities probe market mayhem
BEIJING/LONDON By Paul Carsten and Nishant Kumar Mon Aug 31, 2015
The head of hedge fund manager Man Group Plc’s (EMG.L) China business has been taken into custody to help authorities in a probe into recent market volatility, Bloomberg reported on Monday, while separately a local financial reporter confessed on national TV to having spread false information that caused “panic and disorder”.
Both are likely to jangle nerves in the financial industry as regulators try to find out who they think was behind China’s wild stock market rollercoaster ride in the past three months.
Authorities have been investigating possible market manipulation following wild swings in the stock markets, .CSI300 .SSEC which have plunged around 40 percent since mid-June on concerns of a slowing economy and a surprise devaluation of the yuan currency CNY=CFXS earlier this month.
Officials are probing the financial industry amid allegations of malicious short-selling and other strategies seen as weakening confidence in the market.
Bloomberg, citing a person familiar with the matter, said Li Yifei, Man Group’s China chairwoman, was assisting with police inquiries, noting this doesn’t mean she faces charges or has done anything wrong. Reuters could not independently confirm the report.
Man Group spokeswoman Rosanna Konarzewski declined to comment on the matter, and China’s Ministry of Public Security could not immediately be reached for comment outside regular working hours.
Li’s husband, Wang Chaoyong, told Reuters he had spoken to his wife on Sunday and Monday, and she had told him she was in “highly confidential” meetings. “She said she was in meetings and it’s inconvenient for me to contact her,” he said by phone, adding he did not know where the meetings were taking place.
Separately, Chinese police are looking into the spreading of rumors about the stock market, as well as other issues such as the fatal explosions at a chemical storage facility in Tianjin.
On Monday, Wang Xiaolu, a reporter for the Caijing business magazine, read a confession on national state television, saying he spread false information in his reporting of the stock market that had caused “panic and disorder”.
“I shouldn’t have sought to make a big splash just for the sake of sensationalism,” he said.
It was not possible to verify whether Wang made his confession freely or under any coercion.
State news agency Xinhua said earlier that 197 people in total have been punished in the rumor campaign.
The investigations are likely to unsettle China’s investment community, and the report of Li’s involvement could leave foreign investors particularly on edge.
“Short run, any sane foreign businessman would have pause about doing business in China, given the environment,” said Bob Eisenbeis, vice chairman and chief monetary economist at Cumberland Advisors. “Long run, people will not overlook the size of the market and what that offers.”
Li, a former MTV Networks executive, was appointed Country Chair, China in 2011, according to a page on Man Group’s website archived by Google on Aug. 6. The page is not currently accessible.
Man Group says on its website it has $78.8 billion of assets under management.
(Reporting by Paul Carsten and Nishant Kumar, with additional reporting by Michelle Price, Shu Zhang, Richard Leong and Chris Kaufman; Writing by Rachel Armstrong; Editing by Mark Bendeich and Ian Geoghegan)