China Markets Face Further Downside

China Markets Face Further Downside

HEFFX % year growth target for China remains at 6%, much faster than most of the world but equities in the region remain overvalued.

China’s CSI300 index ended flat after a late dip to leave it down 14.7 percent on the month, and the Shanghai Composite Index lost 1 percent, extending its July losses to 13.4 percent despite recent support measures by the country’s authorities.

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China’s main share markets, both among the world’s five biggest, have slumped around 30 percent since mid-June and authorities have been flailing in efforts to prevent a further sell-off that could spill over into the wider economy.

The markets regulator, the China Securities Regulatory Commission (CSRC), wants the trading records to try to identify those with net short positions who would profit in case of further falls in China-listed shares, three sources at Chinese brokerages and two at foreign financial institutions said.

At its regular press conference on Friday, the CSRC said it had not directly contacted top executives at Hong Kong brokerages. It also noted that it was normal, in the course of an investigation, to reach out to “relevant parties”.

China’s securities regulator said on Friday it was investigating the impact of automated trading on the market and has clamped down on 24 trading accounts found to have abnormal bids for shares or bid cancellations.

Crude oil also slipped for a second session as concern over global oversupply intensified after the head of the OPEC oil exporters’ cartel indicated there would be no cutback in production. U.S. crude was down 0.3 percent at $48.2 a barrel.

Lead by China’s woes, emerging stocks looked on track to finish their third straight month in the red, with many near multi-year lows as the sector grappled with the prospect of U.S. rate rises and sluggish growth data at home.

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