SHANGHAI/HONG, KONG/JAKARTA – China’s benchmark stock index capped the biggest gain since 2009 in volatile trading as the government battled to restore confidence in a market that lost $3.9 trillion in less than a month. Major shareholders were dealt a six-month ban on selling, and state media were told not to mention the turmoil in the same breath as politics.
The Shanghai Composite Index jumped 5.8 percent to 3,709.33 at the close on Thursday. But 1,439 companies were halted on mainland exchanges, locking sellers out of half of the market.
Japan’s biggest securities firms blocked customers from buying and selling Chinese equity funds. Nomura Holdings Inc.’s asset-management unit suspended redemptions from three funds as of Thursday and said it would not take orders for two of them. Daiwa Securities Group Inc.’s fund-management arm said it stopped purchases and redemptions on two funds.
Nomura “took into consideration the difficulty of calculating standard valuations, and decided to stop the buying and selling of funds temporarily,” the company said. Daiwa said in a statement that trading will be halted “for the time being,” citing low liquidity.
The Nikkei ended in positive territory, having recovered from a steep drop in the morning. It ended up 117.86 points, or 0.60 percent, from Wednesday at 19,855.50. The Topix finished 2.59 points, or 0.16 percent, lower at 1,579.89.
“People began the day panic-selling,” said Seiichiro Iwamoto of Mizuho Asset Management Co. in Tokyo. “If there’s concern about liquidity, of course people are going to be surprised. It’s calming down now though.”
Worries persisted that a cocktail of restrictions and incentives imposed by Chinese authorities may spell further trouble ahead. Officials have unveiled market-boosting measures almost every night over the past two weeks.
Late Wednesday, regulators banned major stockholders, corporate executives and directors from selling stakes in listed companies for six months. On Thursday banks were told they can roll over loans backed by shares.
And sources said Thursday the Chinese Communist Party issued an urgent order to news media from Tuesday to Wednesday, requiring them to report positively about the economy and telling them they should not use comments of scholars and other experts who are critical of the government’s policies.
China’s public security bureau is also stepping in to investigate “malicious” shorting of stocks, the official Xinhua News Agency reported Thursday. Earlier the securities regulator pledged to “strictly” punish market manipulation, and China’s state-run media blamed short selling, rumor-mongering and foreign meddling for fueling the stock slide.
“If you sell huge amounts of stock on the spot market and sell lots of futures contracts, then you’ll probably be a ‘malicious short seller,’ ” said Jiang Lin, an analyst at Xinhu Futures Co. in Shanghai. “They will probably investigate a few accounts with big amounts of money and catch some as typical examples.”
Short selling, in which people sell borrowed stock at lower prices to bet on its decline, represents a small portion of China’s trades. Short positions on the Shanghai Stock Exchange totaled just 1.62 billion yuan ($261 million) on Wednesday, or less than 0.01 percent of the country’s market capitalization.
Overall, some analysts said Thursday the measures were having a calming effect.
“As China beefs up its efforts to rescue the market with even the public security ministry involved, market sentiment is recovering slightly,” said Qian Qimin, an analyst at Shenwan Hongyuan Group Co. in Shanghai. “Whether it’s sustainable will depend on what policies are coming next.”
Meanwhile, concern persisted that China’s turmoil represents a bigger risk to the global economy than the Greek crisis, threatening investment and demand.
“For us the situation in China is more worrying,” said Indonesian Vice President Joseph Kalla.
“Chinese SOEs who until now are keen to invest, work with us, their values are going down,” he said, referring to state-owned enterprises. “Automatically, Chinese industries will also experience a slowdown.”
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