China pins market plunge on financial journalist, airs ‘confession’

31 Aug 2015 | Author: | No comments yet »

China pins market plunge on financial journalist, airs ‘confession’.

In footage broadcast Monday morning on CCTV, China’s state broadcaster, a weary-looking Wang said he obtained information about China’s securities regulator “through private channels” and then added his “own subjective judgment” to the report. “During a sensitive period, I should not have published a report which had such a huge negative impact,” he said.China’s stocks fell, capping the benchmark index’s biggest two-month tumble since 2008, amid concern that government intervention to prop up the market will fail.

China has punished 197 people in a special campaign by police targeting online rumors about China’s stock market, the recent fatal explosions in Tianjin and “other key events”, Al Jazeera said quoting China’s state media reports.Hong Kong (CNNMoney) — Chinese authorities have arrested nearly 200 people for alleged online rumor-mongering about China’s stock market turmoil and a recent, deadly chemical factory explosion in Tianjin. The high-profile — and deeply problematic — forced apology came amid a broader crackdown as Chinese authorities struggle to cope with the fallout from the Tianjin blasts and the ongoing stock crisis. Among the arrested is Wang Xiaolu, a journalist for financial publication Caijing Magazine, “who has been placed under ‘criminal compulsory measures’ for suspected violations of colluding with others and fabricating and spreading fake information on securities and futures market,” according to Chinese state media.

Since an epic stock boom went bust this summer, China’s government has struggled to contain the crisis, ordering the press to downplay the story, and periodically singling out scapegoats, from hostile foreign forces, to “malicious” short-sellers, to the U.S. Citic Securities Co. slid 5 percent after Xinhua News Agency said executives were detained on suspicion of insider trading and the securities regulator was said to order the brokerage industry to boost its contribution to the nation’s market rescue. Xinhua reported that authorities had also detained an official from China’s securities watchdog and four senior executives of the country’s major securities dealer for “stock market violations”. The Shanghai Composite closed near its highest level of the day for the third straight session amid speculation state-backed funds are using afternoon share purchases to bolster the market before the parade, which the government will use to demonstrate its rising military and political might. Formal arrest in China normally comes after some time in police detention, when the case is handed to prosecutors, with trial and conviction almost guaranteed.

In July 20 story in Caijing, Wang wrote that the China Securities and Regulatory Commission (CSRC) was weighing whether to stop stabilizing share prices. Swings in Chinese markets this month have rattled investors worldwide as they struggle to anticipate policy actions in the world’s second-largest economy. “There is a lot of confusion about purchases of stocks by state-linked funds,” said Gerry Alfonso, a sales trader at Shenwan Hongyuan Group Co. in Shanghai. “Disclosures are very limited so it is impossible to know what they are doing with certainty.” The CSI 300 Index rose 0.7 percent after slumping as much as 4.1 percent earlier. Tags: Caijing magazine report, China crackdown on online rumormongers, China punishes 197 online rumormongers, Chinese journo says report created panic in stock market, Liu Shufan in insider trading, report in Caijing, seditious rumors about China’s war parade, Wang Xiaolu The CSRC denied the report the day it was published, calling it “irresponsible.” More than a month later, with CSRC indeed taking a more hands-off approach, and Chinese markets experiencing another precipitous drop, Wang was detained for spreading “false information.” Reporters without Borders condemned Wang’s detention and called for his release. “Suggesting that a business journalist was responsible for the spectacular fall in share prices is a denial of reality, “said Christophe Deloire, the group’s secretary-general, according to a statement published on their Web site. China’s government frequently censors information — domestic media is heavily state-controlled, and social media sites such as Google and Facebook are blocked online.

Earlier this month, a number of deadly explosions occurred at a chemical storage warehouse in Tianjin, a major port city on the northeastern coast of China. Hong Kong’s bourse will be closed on Thursday. “It look like that the government is buying shares today,” said Li Jingyuan, general manager of the securities investment department at Shanghai Zhaoyi Asset Management. “They still want to stabilize the market at this level.” The Shanghai gauge will stabilize in a range between 2,700 and 3,000, David Gaud, senior fund manager at Edmond de Rothschild Asset Management, wrote in an e-mail. Four executives of Citic Securities, the nation’s largest brokerage, a journalist at business magazine Caijing and a staff member at the CSRC all confessed to alleged stock-related crimes, Xinhua said. Gree Electric Appliances Inc., China’s largest manufacturer of air-conditioners, dropped 5.4 percent after saying its first-half net income rose 0.05 percent from a year earlier. Puts that pay out on a 10 percent drop in the China 50 exchange-traded fund cost 9.3 points more on Monday than calls betting on a 10 percent gain, according to implied volatility data on one-month contracts.

For the U.S.-listed Deutsche X-trackers Harvest CSI 300 China A-Shares ETF, the skew reached a record 38 points on Aug. 27 and closed the week at 28 points.

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