China’s Stocks Surges as Regulators Issue More Measures to Support Markets

The China Securities Regulatory Commission (CSRC) issued a statement on Monday night, vowing to make those who illegally manipulate the market, engage in malicious short selling,  bankrupt or jailed.

The Chinese markets responded positively in the morning session as the Shanghai Composite rose 1%, Shenzhen Index jumped 3% and Hong Kong’s Hang Seng Index gained 2% on Tuesday.

The regulators have unveiled several measures to support the market, including an announcement from Central Huijin Investment Ltd., the unit that holds Chinese government stakes in big financial institutions, to buy more exchange-traded funds (ETFs) to stabilize the operation of the capital market. There are also measures that aim to tackle margin financing and short selling, as well as actions to mitigate the possible risks associated with collateral equity.

Chinese authorities have been ramping up support for capital markets in recent weeks as the Shanghai Composite is down 6% for the year, while Shenzhen Component Index drops 10%.

Meanwhile, China’s margin debt for stock trades dropped the most since 2016 as a plummet in stock markets triggered traders to unwind leveraged positions.