BOFIT Viikkokatsaus / BOFIT Weekly Review 2015/28
Additionally, IPOs have been halted for the time being and the state enterprises are not allowed to reduce their ownership stake. On the contrary, they have been advised to increase their shareholdings. At the weekend, 21 securities brokers revealed they would invest at least 120 billion yuan ($20 billion) in a market stabilisation fund. They have committed to holding share at least until the Shanghai Index returns to 4,500 points (at Friday’s opening, the index stood at 3,707). Many other investment funds and mutual funds have announced plans to invest their own assets in shares. Some firms have repurchased their own shares.
By Wednesday (July 8), it was clear government stabilisation measures were inadequate, so the CSRC banned investors owning 5 % or more of an exchange-listed company from selling their shares for the next six months. The ban extends to officers and management of listed firms. As of Wednesday, nearly half of China’s firms listed in mainland had requested trading in their shares suspended. Shares recovered in Thursday and Friday markets, but the increase is difficult to interpret as trading of so many shares had been suspended.
Shares in Shanghai have slid about 30 % from their June peak. Shenzhen shares are off about 40 %. Even with the plunge, Chinese shares are still up 70–80 % from a year ago, which has made some observers to question the reasons behind the recent government actions.