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Chinese Stocks Extend Yesterday's Plunge Despite Regulators "Asking" Insurers To Stop "Net Sales"

Following last night's afternoon session plungefest (with ChiNext's biggest drop in a month), as it appeared the government experimented with 'free' markets briefly, regulators have "asked" insurance companies to be "net sellers" of stocks going forward. With margin debt dropping for the 4th day in a row (to fresh 4-month lows), Markit noted that accusations of foreigners short selling shares is “overblown” by Chinese market regulators and not the cause of a recent rout in the stock market, according to the SCMP. The requests and threats appear to not be working as CSI-300 futures open down 0.7%.

As a reminder, this is how things ended last night...

 

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And tonight we are seeing losses extend...

  • *CHINA'S CSI 300 INDEX SET TO OPEN DOWN 1% TO 3,777.15
  • *CHINA SHANGHAI COMPOSITE SET TO OPEN DOWN 1.4% TO 3,655.67

 

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More measures...

China Insurance Regulatory Commission asked insurers to try their best to avoid net sales of equities in near future, Shanghai Securities News reports, citing an unidentified person from an insurer.

And refutations to China's claims that foreign sellers were "waging economic war"

Accusations of foreigners short selling shares is “overblown” by Chinese market regulators and not the cause of a recent rout in the stock market, South China Morning Post cites financial data co. Markit analyst Relte Stephen Schutte as saying.

  • Official data shows minimal short selling of individual shares with shorting of domestic ETFs at only 1.2% of total domestic ETFs under management, Schutte is cited as saying

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On a more sombre note, the first major casualty of the Chinese stock market disaster has happened as Caixin reports well-known fund manager, Liu Qiang, a 36-year-old fund manager at Ruilin Jiachi,  jumped to his death from a high-rise in downtown Beijing, angry the government intervened in the stock market rout, people who knew him say...

Several people close to Liu said he suffered from depression and returned to work in April after spending three years in the southwestern province of Yunnan where he was seeking treatment for depression. "He has had a very tough time in recent years," one of Liu's friends said.

 

 

Some of Liu's friends said he had been very frustrated by the government's efforts to support the bourse amid recent turmoil because he believed this upset market order. He thought that "the rules and order of the market had been broken … and was desperate, feeling that he was at his wit's end," one of his friends said.

 

Publicly available data show that the fund he managed, which invests in stocks and futures, had lost about 18 percent of its value this year and would be liquidated if losses exceeded 20 percent. But a person close to Liu said most of the fund's investors were his friends who agreed with his belief in long-term investment. They were not eager to liquidate the fund, he said.

 

In a blog dated July 7, Liu wrote: "The stock market disaster has turned many of my investment principles upside down … and made me doubt many times whether I'm still suitable for the market."

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