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China seeks to steady markets ahead of Communist Party Congress: Sources

China seeks to steady markets ahead of Communist Party Congress: Sources

FILE PHOTO: A man wearing a protective mask is seen inside the Shanghai Stock Exchange building, as the country is hit by a new coronavirus outbreak, at the Pudong financial district in Shanghai, China February 28, 2020. REUTERS/Aly Song/

SHANGHAI: China's securities regulators recently told some fund managers and brokers to avoid massive share sales ahead of next month's Communist Party Congress, in an effort to avoid big market fluctuations, two sources with direct knowledge told Reuters.

The instructions were given verbally by the Shanghai and Shenzhen Stock Exchanges through so-called "window guidance", or unofficial policy directives with no written documents, one of the sources said.

"They asked (us) to avoid abnormal trading activities, including massive sell-offs and buy-ins. Basically it's a move to stabilise the market," the source said.

Another buy-side source said they also received the notice. "It's politically sensitive," the source said.

The sources asked not to be named due to the sensitivity of the issue.

China's Shanghai and Shenzhen stock exchanges and the China Securities Regulatory Commission (CSRC) did not immediately reply to Reuters' requests for comment.

China's ruling Communist Party opens its 20th congress on Oct. 16. It is likely to end with President Xi Jinping anointed for a third, five-year term as the supreme leader and a shuffle of personnel on the decision-making Politburo.

In late July, the Shanghai Stock Exchange (SSE) vowed to maintain market stability ahead of the Party Congress, saying it will "resolutely" prevent big and swift swings in capital markets.

A compliance officer at a Shanghai-based mutual fund house said he had not received window guidance, but that helping to ensure market stability ahead of the congress "is a natural responsibility" for fund managers.

China's main stock benchmark CSI 300 has lost roughly 6 per cent so far this month and more than 20 per cent so far this year.

Risk appetite has been dampened by gloomy growth prospects as COVID-19 outbreaks, a property market crisis and heightened geopolitical tensions hurt economic growth.

Source: Reuters/nh

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