Article: Ye Fei stocks scandal shows why China must encourage whistle-blowers

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Ye Fei stocks scandal shows why China must encourage whistle-blowers

Wang Xiangwei, 22 May 2021

For an outsider to understand China’s A-share stock markets, which are dominated by retail investors and thus known for high levels of market turnover and volatility, learning about harvesting chives and stir-frying methods in Chinese cookery would help a great deal. By official counts, there are more than 180 million mostly small investors who, driven by rumours, trade in and out of positions very frequently, contributing to wild fluctuations. The trading pattern is known as chao, the Chinese term for a method of stir-frying meat or vegetables rapidly in a wok at high heat.

This method of trading makes suckers out of many, who are compared to chives. Easy to grow and known as a culinary delicacy across China, chives are a hardy perennial plant which return every year after being harvested. The phrase Ge Jiu Cai or “harvesting chives” is a way of saying that as one group of investors falls prey to rampant securities frauds, another group always steps up.

It is an open secret that retail investors are often harvested like chives by unscrupulous brokers and fund managers but securities frauds are harder to prove and nail without the help of whistle-blowers.

That explains why over the past two weeks, one of the hottest topics in the Chinese stock markets involved Ye Fei, a controversial private equity manager and an online influencer, who took to Weibo, the Chinese equivalent of Twitter, to allege that at least 18 stocks were being manipulated by listed companies, private equity funds, publicly offered funds, brokers, and proxy holders.

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Article: China’s market regulator starts investigation into stock price manipulation amid fund complaints

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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. Continue reading “Article: China’s market regulator starts investigation into stock price manipulation amid fund complaints”

Article: China tells Alibaba to sell off media assets in tech crackdown

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China tells Alibaba to sell off media assets in tech crackdown

Mark Sweney and Helen Davidson, 16 March 2021

Beijing has ordered e-commerce company Alibaba to sell off media assets including Hong Kong’s South China Morning Post (SCMP) as the Chinese government looks to crack down on the growing public influence held by the country’s sprawling tech conglomerates.

Alibaba has become the lightning rod in the crackdown on big tech after founder Jack Ma, one of China’s most popular, outspoken and wealthiest entrepreneurs, delivered a blunt speech last year criticising national regulators that reportedly infuriated the president, Xi Jinping.

Following the comments, Chinese regulators blocked the $34bn stock market flotation of Alibaba online payments subsidiary Ant Group, which would have been the biggest share offering in history, and Ma disappeared from the public eye for three months. Last week, it emerged that regulators are reportedly preparing to hit Alibaba with a record fine in excess of $975m over anti-competitive practices.

China’s protectionist business regime, which shuts out foreign companies including Google and Netflix, has enabled a group of homegrown conglomerates to flourish as the country looks to build the next wave of global tech champions to challenge Silicon Valley.

Beijing has struggled to maintain control over their activities and wider influence with Alibaba’s media empire expanding to buy SCMP, Hong Kong’s premier English-language newspaper, in 2016 and holding stakes in social network Weibo, video streaming service Youku and Yicai Media Group, one of the country’s most influential news outlets.

“What is interesting here is that the Chinese Communist party has done a good job of cultivating huge tech giants, national champions,” said Jamie MacEwan, a senior media analyst at Enders Analysis. “But there has always been a split under the surface between those who want to encourage the great tech leap forward and a growing unease among those worried about these huge companies and the big public figures at the head of them, like Ma, outgrowing the patronage of the [Chinese communist] party.”

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