Chinese regulator promises to protect small investors

BANGKOK

Chinese shares gyrated yesterday, sinking to 5-year lows, after stock market regulators sought to reassure jittery investors with a promise to crack down on stock price manipulation and “malicious short selling.”

Shares in Shanghai and the smaller market in Shenzhen, swung between big losses and small gains throughout the day.

The markets have languished on heavy selling of property shares that have suffered with a slump in the real estate market.

Market observers said there were signs the authorities had, as is often the case, ordered big institutional investors to step up buying of state-owned banks and other heavyweights.

The Industrial & Commercial Bank of China gained 2.3 percent, Bank of China was up 2.6 percent and the Agricultural Bank of China rose 2.2 percent.

But shares still mostly lost ground. The Shenzhen Component index lost 1.1 percent after dipping as much as 4.4 percent. The Shanghai Composite index shed 1 percent. 

Chinese companies have lost billions of dollars worth of market value as investors shifted away from the markets in Hong Kong and the mainland in search of better returns.

Apart from the troubles in the property market, a slowing of China's economy, the world's second largest, has also taken a toll.

Prices have continued to fall despite various confidence-boosting measures rolled out so far, including freeing up more than 1 trillion yuan ($140 billion) for lending to developers.

The China Securities Regulatory Commission's announcement on Sunday appeared to be designed to reassure individual investors who account for more than half of trading volume.