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Last week, Patti Waldmeir and Jamil Anderlini of The Financial Times reported:
Pre-Olympic warnings to China’s fund managers
Fund managers in China have been warned to watch what they say about the country’s stock market, in the latest manifestation of a pre-Olympic Chinese government crackdown on everything from Beijing weather to suspected terrorists.
In a bluntly worded notice distributed to fund managers, including foreign-Chinese joint ventures, China’s securities watchdog warned fund employees not to say anything publicly that could harm the stability of the market.
The China Securities Regulatory Commission, which issued the notice, did not make overt reference to the Olympics, but the message was not lost on local fund managers, who linked the notice to a broader effort to avoid market turmoil in the pre-Olympic period…
…“Fund company executives, fund managers and other important staff should be very careful about their speeches and blog content, which may cause market fluctuations,” the notice says, adding that companies should be cautious about holding public forums “which may cause market fluctuations”.
While it’s good to see that the stock exchange regulators think that blogs are important, it would be even better to the see the Olympic clampdown on irresponsible behavior in the markets extended beyond the end of August, and to include other types of irresponsible behavior such as insider trading, manipulation of stock prices, egregious conflicts of interest etc. etc.
For more on shady stock market dealings, see two recent articles by Gady Epstein at Forbes:
Lin Rongshi isn’t up to his old tricks in Chinese stocks. But, as he describes, plenty of others still are. Fair warning to the bulls.
How do you say “irrational exuberance” in Chinese?
Two years ago investors had no use for Jilin Aodong Medicine Industry Group or the Liaoning Cheng Da Co., two of the many clunker state-owned companies with publicly traded shares. The shares change hands on the Shenzhen and Shanghai exchanges, respectively.
Since then the stated core businesses of both companies have stagnated and China’s securities regulator has implicated Jilin Aodong in an insider trading investigation. In a normal market that would scare buyers away.
China’s markets are anything but normal. Both Jilin Aodong and Liaoning Cheng Da shares have risen 750% in the last year, and their stock charts look like copies of each other despite the fact that one is a drugmaker and the other is ostensibly in the fabrics trade.