Sinister forces are at work in China’s stock market, according to at least one “non-biased” Hong Kong newspaper. To be sure, one might well be tempted to suspect that the inevitable unwind of a completely unsustainable (and by many measures, entirely insane) margin mania is to blame for the brutal selling that has, over the course of just three weeks, cost Chinese shares some $3.5 trillion in market value. But you’d be wrong, according to Ming Pao. Instead, the paper says, the same nefarious speculator who famously broke the BOE now has his sights set on bankrupting illiterate Chinese farmers.

China’s stock exchange regulator has imposed severe limits on stock market selling, having earlier warned of panic in the market as a range of recent government measures failed to prevent stocks plummeting a further 6%. After 10 minutes of morning trading a wave of listed companies’ shares had been suspended across China’s two stock markets after they dropped by the daily limit of 10%. The China Securities Regulatory Commission ruled that controlling shareholders and managers holding more than 5% of a company’s shares could not reduce their holdings for six months, in an attempt to maintain stability in the markets. Earlier, the regulator’s statement saying there had been a surge in “irrational selling” and “panic sentiment” had done little to calm investor nerves. The Shanghai composite index closed down 5.9%, while the SCI 300 index of the biggest listed companies in Shanghai and Shenzhen lost 6.8%. The rout spread to other world stock markets, with Hong Kong’s Hang Seng index closing almost 6% down, its biggest one-day drop for nearly seven years. Since their June peak, Shanghai stocks have plunged 30% in the space of three weeks, having soared more than 150% in the previous 12 months as millions of -private investors piled in. “It’s a stampede,” said Wang Feng, a former Wall Street trader who founded the hedge fund firm Alpha Squared Capital. “And the problem of the market is that all the players move in the same direction and are too emotional.”

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