China investigates securities brokerages amid turmoil
- Published
Shares have kept falling, despite an interest rate cut
Chinese police are investigating four securities brokerage firms for possible stock manipulation amid market turmoil.
A number of brokerage employees, current and former members of the regulatory commission, and a financial journalist are also being investigated for misconduct.
China's volatile stock market dropped sharply on Monday, in its biggest single-day fall since 2007.
It has caused a knock-on effect on other markets globally as worry spread.
Police are investigating:
Securities brokerages Haitong, GF, Huatai and Founder for allegedly failing to properly identify clients
One current and one former staff member at the China Securities Regulatory Commission, who are accused of insider trading and forging official documents
Wang Xiaolu, a journalist with business magazine Caijing, for allegedly spreading false information
Eight employees of Citic Securities, the country's biggest brokerage, for suspected illegal trading
However, Citic said in a statement to the Hong Kong stock exchange on Wednesday that it had not been informed of an investigation.
The other brokerages had announced their investigations in statements late on Tuesday.
China's falling shares have sent jitters around the world
On Wednesday China's benchmark Shanghai Composite fell 1.27% to 2,927.29, despite a fresh rate cut a day earlier by the central bank.
The index had fallen about 16% this week, leading to sharp falls in Asia and the US over the past few days.
On Tuesday, China's central bank cut its key lending rate by 0.25 percentage points to 4.6% in a bid to calm stock markets.
Given China's central role in world trade, a slowdown in the world's second-largest economy would be likely to reverberate around the globe.