Stocks of US-listed Chinese companies, Hong Kong shares and A-shares plunged recently in part because of malicious shorting by some international investors, a Chinese academic said yesterday.
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Chinese regulators are mulling measures to crack down on malicious short sellers, the local National Business Daily said today, citing people familiar with the matter.
The report did not provide more information on the matter, but it appears to be referring mainly to the A-share market.
Notably, the report mentioned that Zhang Ming, deputy director of the Institute of Finance at the Chinese Academy of Social Sciences, deputy director of the National Institution for Finance& Development, had said that stocks of US-listed Chinese companies, Hong Kong shares and A-shares plunged recently in part because of malicious shorting by some international investors.
After the recent violent shocks in China-related assets, the country's State Council Financial Stability and Development Committee held a meeting to express its support for capital markets.
The meeting, China's highest-level financial meeting, was chaired by Vice Premier Liu He and discussed the current economic situation and capital market issues, according to a report today by Xinhua News Agency early today.
In an article published on his WeChat account yesterday evening, Zhang called on the Chinese government to stabilize the stock markets through a variety of measures as soon as possible.
In the article, he said the background of this round of stock market decline is very complicated, and the core reason is not the over-valuation of Chinese listed companies, but the combined blow of external geopolitical shocks, China-US game-playing and malicious shorting by international investors.
"International institutional investors, represented by the US, shorted China-backed stocks in various markets, which was particularly evident in the Chinese concept stock market and Hong Kong market," the article said.
Against the backdrop of the conflict between Russia and Ukraine, shorting Chinese stocks has become a "politically correct" option for some Wall Street investors, he wrote.
Many of the Chinese companies listed outside of China are among the best local companies, reflecting the international competitiveness of Chinese companies, he said, adding that the situation their shares are now facing is something that hurts supporters and pleases opponents.
Under such circumstances, it makes a strong case for the Chinese government to intervene appropriately to maintain the basic stability of the stock markets and avoid a continued and sustained decline, he said.
China voices support for capital markets after recent turmoil
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