INSUBCONTINENT EXCLUSIVE:
China's securities regulator has urged some mutual fund managers not to sell shares unless they face investor redemptions, four sources
told Reuters, as the country's stock markets plunged on Monday amid a growing virus outbreak.
The China Securities Regulatory Commission
(CSRC) is giving verbal instructions to major mutual fund companies, asking them not to offload their stock holdings on Monday unless
necessary, according to the fund sources with direct knowledge of the so-called window guidance
Selling in the following days should also be restrained, two sources said.
Despite the sales restrictions - issued by CSRC on Sunday evening
according to one source - the market still plunged.
Chinese stocks tumbled more than 8 per cent on Monday morning as mainland markets
reopened following a 10-day break, giving investors the first chance to react to the rapidly-spreading coronavirus
The death toll from the epidemic has risen to 361 in China.
"Potential massive investor redemption is a big concern," said one fund
"If that happens, mutual fund managers have no choice but sell."
Chinese regulators had taken other measures to limit the virus' damage to
the country's financial markets.
Over the weekend, CSRC issued a verbal directive to brokerages including Citic Securities Co and China
International Capital Corp, seeking to limit short-selling activities by their clients on Monday.
In addition, the central bank injected 1.2
trillion yuan ($174 billion) worth of liquidity into the banking system on Monday via open market operations to calm market anxiety
CSRC's latest window guidance - verbal instructions from regulators to mainly Chinese companies - risk inviting fresh criticism from
foreign investors who have complained about a lack of transparency and an uneven playing field in China
Regulators have been more careful with such measures to stabilise the markets, especially after MSCI added Chinese shares into its emerging
markets index, another fund manager said.