China Loses All Control: Arrests Journalist, Financial Executive Over Market Crash
For two months, China has been on a quest to control both the stock market itself and the narrative around the stock market.
After an unwind in the CNY1 trillion back alley margin lending complex sparked a late June selloff, China cobbled together a plunge protection team run by China Securities Finance (an arm of CSRC) and began intervening in the market.
That effort has cost an estimated CNY900 billion so far.
On July 20, Caijing magazine suggested that CSF was setting up to scale back the market interventions which many believed had kept the SHCOMP from collapsing altogether. Here’s what happened next:
That suggestion caused futures to slide in China and in short order, the “rumor” was denied by CSRC. Now, the reporter who penned that story has been arrested for, as Bloomberg put it earlier today, “spreading fake stock and futures trading information.”
BREAKING: China’s well-respected Caijing magazine confirmed 1 of its reporters was arrested by police for a stock market story denied by Gov
— George Chen (@george_chen) August 26, 2015
This comes on the heels of a move by Beijing earlier this week to suppress discussion of Monday’s market rout, which, along with the selloffs it triggered in bourses across the globe, was dubbed “Black Monday.”
Of course this isn’t the first time – and it probably won’t be the last – that China has cracked down on the media for “subversive” coverage of financial markets. Early last month, Beijing reportedly banned the use of the phrases “equity disaster” and “rescue the market.” That said, throwing reporters in jail marks a new escalation in the war on financial reporters, or, as the managing editor of The South China Morning Post put it, “you already know it’s risky to be political journalists in China – Now financial reporter is risky job too.”
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