While authorities have been ratcheting up curbs on bearish bets for months, the ban on net selling at the open and close represents a notable tightening of the government’s grip on market activity that risks upending popular strategies used by hedge funds and other institutional investors. Firms affected by the ban are unable to sell more shares than they buy during the first and last 30 minutes of trading, the people said.
China has banned major institutional investors from reducing equity holdings at the open and close of each trading day, part of the government’s most forceful attempt yet to prop up the nation’s US$8.6 trillion ($11.53 trillion) stock market.
The order from China’s securities watchdog was recently delivered to major asset managers and the proprietary trading desks of brokerages, according to people familiar with the matter, who asked not to be named because they weren’t authorized to speak publicly. The China Securities Regulatory Commission, led by newly appointed Chairman Wu Qing, has also created a task force with the nation’s stock exchanges to monitor short selling and issue warnings to firms that profit from the wagers, the people said.
