China’s four-week-long stock market rout wiped out nearly 30 percent off the Shanghai Composite Index since its highs of June. To stem those losses the Chinese government has formulated an interesting hypothesis: stocks won’t go down if you ban sell orders….
Working off this proposition Beijing has ordered shareholders with more than a 5-percent interest to stop selling shares. Directors, supervisors, and senior management personnel are also barred from reducing their holdings.
China has also launched investigations on those it believes engaged in malicious short selling. The threat of imprisonment has proved an effective deterrent to those who may have been contemplating a short in the Chinese markets.
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