Chinese shares tumbled on Friday, after the country’s securities market regulator said it had opened an investigation into suspected market manipulation as Beijing struggles to head off a full-blown crash that could damage an already slowing economy. After a slump of more than 20 percent in Chinese stocks since mid-June, the China Securities Regulatory Commission (CSRC) has set up a team to look at “clues of illegal manipulation across markets”.
The China Daily newspaper said on Friday that the CSRC was probing investors who used stock index futures to “short” the market, or bet on prices falling. News of the probe did nothing to arrest the sell-off that has become a major worry for global investors, who fear a meltdown in China’s highly leveraged stock market could destabilize the world’s second-largest economy.
The CSI300 index .CSI300 of the largest listed companies in Shanghai and Shenzhen dropped 3 percent in early trading, while the Shanghai Composite Index .SSEC shed 4 percent. The Shanghai benchmark had slumped below 4,000 points on Thursday for the first time since April – a key support level that analysts had expected Beijing to defend.
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