Chinese media outlets are blaming George Soros and other foreign speculators for the recent selloff in China markets.
China’s stock markets have sunk roughly 30% over the last three weeks, costing investors some $3.5 trillion in market value. Taiwan-based China Times is now blaming the selloff on malicious ‘foreign’ short-sellers. The pro-China publication has suggested that a number of noted speculators and investment banks, including Morgan Stanley, Credit Suisse, George Soros, and Bill Gross may be using “massive funds” to precipitate a selloff. (Source: China Times, last accessed July 9, 2015.)
Following the news, Chinese police visited the office of the country’s securities regulator on Thursday to investigate hints that suggest “vicious” short-selling of stocks, according to the Chinese state news agency.
Despite some emergency measurements introduced by the Chinese government, such as lower interest rates and required reserve ratio cuts, investor confidence has deteriorated. Moreover, fear is growing that could lead to an even bigger threat to the global economy than the crisis in Greece.
According to an analyst, massive funds entered into the futures market and started to create a short position which eventually caused the collapse of China’s market. It is believed that the size of the funds and sophisticated trading strategies were beyond the capacity of Chinese institutional investors.
This is not the first time that the massive selloff in China’s stock market has been blamed on foreigners. Some analysts have accused billionaire investor George Soros for the sharp drop in Hong Kong share prices in 1997 after he took short positions on both the Hong Kong dollar and the Hang Seng index future.
However, the Chinese government is expected to announce more cautionary policies to rescue the equity markets, such as regulations posed to prevent short-selling opportunities. This, in due course, may help to stabilize the crashing market.
Also Read: George Soros’ Top 10 Stocks to Watch in 2015
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