Shanghai shares plunge as regulator imposes limits on margin financing for 3 major brokerages
Chinese shares plunged 6.3 percent Monday after the country's securities regulator imposed margin trading curbs on several major brokerages, a possible sign that authorities are trying to rein in the market's big gains. Other Asian stock markets were mostly higher.
KEEPING SCORE: The Shanghai Composite Index was down 6.3 percent at 3,163.72. Its dive rubbed off on Hong Kong where the Hang Seng was off 1.1 percent at 23,840.91. Japan's Nikkei 225 rose 0.6 percent to 16,957.86 and South Korea's Kospi gained 0.9 percent to 1905.44. Australia's S&P/ASX 200 rose 0.4 percent to 5,323.50. Shares were also higher in Taiwan, New Zealand and Southeast Asia.
CHINA CURBS: The China Securities Regulatory Commission imposed curbs late Friday on margin financing, or borrowing to purchase stocks, following an investigation of the industry. The three affected brokerages, Citic Securities Co., Haitong Securities Co. and Guotai Junan, were forbidden to lend money and shares to new customers for three months after they allegedly were caught extending margin trading contracts in violation of the rules. The Shanghai Composite has surged almost 60 percent in the past year. The regulator's action has unnerved investors and might be a sign that authorities think the market has risen too much recently. Shares of Guotai Junan, one of the penalized brokerages, fell by the 10 percent daily limit.
CHINA, ECB: Investors are awaiting China's economic growth data due Tuesday, which is likely to show a further slowdown in the fourth quarter, and are also anticipating possible stimulus moves by the European Central Bank. Markets generally settled down after volatility provoked by the Swiss central bank's shock decision Thursday to untether the Swiss franc from the euro. Japan's central bank is not expected to make any major moves in a policy meeting that wraps up Wednesday.
ENERGY: Benchmark U.S. crude was down 37 cents at $48.32 a barrel in electronic trading on the New York Mercantile Exchange. The contract jumped $2.44 on Friday to settle at $48.69. Brent crude, a benchmark for international oils, was down 12 cents at $50.05 a barrel in London.
CURRENCIES: The euro was little changed at $1.1560 from $1.1561 late Friday. The dollar dropped to 117.04 yen from 117.57 yen.