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UPDATE 1-China regulator denies market talk stock rally was suppressed
January 20, 2015 / 1:50 AM / 3 years ago

UPDATE 1-China regulator denies market talk stock rally was suppressed

(Adds context, details of news coverage)

SHANGHAI, Jan 20 (Reuters) - Speculation that China’s regulators intentionally sought to suppress a stock rally by taking actions that led to Monday’s sharp drop in share prices “is not consistent with facts”, said Deng Ke, spokesman for the China Securities Regulatory Commission (CSRC).

Deng’s denial that regulators intentionally clipped the market was carried on the CSRC website late on Monday and published on the front page of China’s main securities newspapers - China Securities Journal, Shanghai Securities News and Securities Times - on Tuesday morning.

The country’s two main indexes both fell 7.7 percent on Monday, their biggest losses since June 2008, and the plunge wiped out around $315 billion of market value from the Shanghai stock exchange, the country’s biggest.

The price collapse came after the CSRC on Friday punished industry heavyweights for illegal operations in their margin trading. Banks were hit after the banking regulator issued draft rules to tighten supervision of entrusted loans, a kind of shadow banking product.

The Securities Times newspaper said in a commentary on Tuesday the moves by the CSRC and China Banking Regulatory Commission paved the way for further monetary easing.

China’s state-controlled securities media has a history of being generally bullish about the stock markets.

Mainland stocks opened little changed on Tuesday.

The China market was one of the world’s best performers in 2014, thanks to a surge of more than 40 percent in the last quarter that was led by brokerages.

Monday’s fall came a day before China reports fourth-quarter and full-year economic growth data. The fourth-quarter is forecast to have expanded at a 7.2 percent pace, the weakest since the depths of the global financial crisis.

Reporting by John Ruwitch; Editing by Richard Pullin and Jacqueline Wong

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