China’s market regulator starts investigation into stock price manipulation amid fund complaints
Martin Choi, 17 May 2021
China’s stock market regulator has started an investigation into alleged price manipulation, vowing to crack down on illegal activities to protect the nation’s 180 million mainly retail investors.
The China Securities Regulatory Commission (CSRC) said on Sunday that it was probing trades in Jiangsu Lettall Electronics and ZOY Home Furnishing by related parties, in response to local media reports. “Manipulating the market seriously infringes upon the legitimate interests of investors and disrupts market order,” the CSRC said in a statement on its website. “This form of ‘cancer’ in the market must be eradicated.”
The warning has come at a time when the CSI 300 Index of biggest companies in Shanghai and Shenzhen has lost 11 per cent in value from its mid-February peak. China’s 20 trillion yuan (US$3.07 trillion) mutual fund industry is among the casualties of the current doldrums.
Since 2020, the CSRC has initiated 65 probes into stock price manipulations, according to the statement, adding that it would adopt a “zero tolerance” policy toward market manipulation. Wang Yue, the 37-year-old billionaire founder of Shanghai Kingnet Network, was jailed for five-and-a-half years for manipulating stock prices late last year.
Jiangsu Lettall Electronics, which manufactures precision metal structural parts and electronic components, fell as much as 10 per cent to 18.92 yuan in intraday trading on Monday. ZOY, which sells furniture including motion sofas, plunged as much as 8.1 per cent to 17.01 yuan. Both companies have plunged more than 40 per cent since their recent highs in March.
