China Stock Exchanges 'Limiting Daily Sales Amid Trade War'

Stock exchanges in China have been restricting share sales by hedge funds and large investors as its trade war with the US intensifies, according to a new report.

Four sources who spoke to Reuters said Chinese bourses have set daily limits on net share sales by hedge funds and large retail investors, four sources said on Friday, as Beijing steps up support for its stock markets during this period of intense turbulence.

Two investor sources said a soft limit on daily net sales by individual hedge funds and big retail investors – implemented through verbal warnings from brokerages – had been set at 50 million yuan ($6.83 million).

ALSO SEE: China Lifts Tariff on US Goods to 125%, as ‘Hikes Become a Joke’

Failure to comply risked a suspension of trading accounts by the stock exchanges, which have issued the directive, two brokerage sources said.

All four sources declined to be identified as they are not authorised to speak to the media. The Shanghai and Shenzhen stock exchanges did not respond to Reuters requests for comment.

China has taken a slew of measures to stabilise its domestic stock markets, reeling from an escalating trade war with the US where President Donald Trump has imposed eye-popping duties of 145% on Chinese goods.

The moves have largely shielded stocks in China from the massive selling seen on global markets.

Beijing on Friday hit back again, and increased its tariffs on US imports to 125%.

‘Top brokerages seeking to steady markets’

China’s state fund Central Huijin has vowed to increase stock holdings, a growing number of listed companies are buying back shares, and top Chinese brokerages have pledged to steady the market amid higher tariffs and global recession risks.

“Such a restriction is understandable as you don’t want to act against state will,” one of the brokerage sources was quoted as saying.

Brokerages have been asked to closely monitor transactions by private funds and big retail clients, according to a notice issued late on Thursday and seen by Reuters.

The current 50 million yuan daily limit on net sales by investors could be lowered further if the market slumps again, the notice said.

China and Hong Kong stocks reversed early declines on Friday and narrowed the week’s losses.

Trump paused his “reciprocal” tariffs on most other countries earlier this week, but has singled out China with tougher duties.