Chinese Stocks Tank; Rest of Asia Close in the Red

Asian stocks closed sharply in the red, led by a heavy afternoon sell off in the Chinese market as brokerages tumbled after authorities launched probes for alleged violations of trading rules.
Elsewhere, the ASX, Nikkei, and Kospi all closed in the red.

China market tanks as CSRC goes after brokerages

In China, equities saw a significant sell off as a result of investigations by the Chinese securities regulatory body into several brokerages for breaking regulations. The Shanghai Composite closed 199 points, or 5.48 percent, lower; the Shenzhen Composite closed 6.1 percent lower, the Chinext was down 6.1 percent, and the CSI300 Index saw a decline of 5.38 percent.

Chinese brokerages took major hits, with Citic Securities, Founder Securities, and China Merchants closing 10.1, 10, and 9.98 percent lower after news broke that the China Securities Regulatory Commission (CSRC) has launched investigations into these firms to weed out short selling and speculation.

Earlier in the day, Citic announced it received a formal notice from the China Securities Regulatory Commission (CSRC) that it was under investigation, along with Guosen Securities, for violating securities laws. Shares of Guosen also plunged, closing 10 percent lower in afternoon trading.

Reuters then reported that Haitong Securities, whose shares were halted from trading, was also being investigated by CSRC for alleged violation of securities regulations. Earlier in the year, the firm was fined 86 million yuan ($13.5 million) for breaching securities rules.


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Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.