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China said to intervene in stocks after $590bn selloff

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(iStock)
(iStock)

Beijing - China moved to support its sinking stock market as state-controlled funds bought equities and the securities regulator signalled a selling ban on major investors will remain beyond this week’s expiration date, according to people familiar with the matter.

Government funds purchased local stocks on Tuesday after a 7% tumble in the CSI 300 Index on Monday triggered a market-wide trading halt, said the people, who asked not to be identified because the buying wasn’t publicly disclosed. The China Securities Regulatory Commission asked bourses verbally to tell listed companies that the six-month sales ban on major stockholders will remain valid beyond January 8, the people said.

Chinese policy makers, who took unprecedented measures to prop up stocks during a summer crash, are stepping in once again to combat a rout that erased $590bn of value in the worst- ever start to a year for the nation’s equity market. While the intervention may ease some selling pressure, it also undermines authorities’ pledge to give markets more sway in the world’s second-largest economy.

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