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Asia Stocks Seesaw Despite China Rate Cut
Date: 8/26/2015 5:24:40 AM Sender: VOA
A Chinese investor monitors stock prices at a brokerage in Beijing, Aug. 26, 2015.

Chinese stocks tumbled further Wednesday, and other Asian shares fluctuated wildly, despite Beijing's latest moves to stimulate growth in the world's second-largest economy.

China's central bank late Tuesday cut interest rates 0.25 percent, and told banks they could hold less money in reserve. The moves make it easier for consumers to buy products and companies to build factories and hire people.

Markets initially reacted positively to the moves, with shares higher Tuesday in Europe and briefly in the United States. But Wednesday saw another frenzied day of trading in Asia, with markets swinging between big gains and losses.

China's benchmark Shanghai Composite Index ended the day down 1.3 percent, while the Shenzhen Composite Index lost over 3 percent by the close.
Elsewhere, Tokyo closed up 3.2 percent, while Hong Kong surrendered earlier gains and ended Wednesday down 1.5 percent. European stock markets also slid by around 1 percent at opening.

Chinese officials acted after several days of plunging stock prices around the world as investors worried that Chinese economic growth was slowing.

'Enviable' expansion

In New York, S&P Capital IQ's Sam Stovall says China's growth probably will fall to 6.6 percent next year, which is dramatically slower than in the past.  But in a VOA interview, Stovall said that rate of expansion is still an "enviable" one.

An expert on China's economy from the Peterson Institute for International Economics, Nick Lardy, says China's economic problems affect other nations because it is the second-largest economy in the world.

That means a slowdown in China cuts demand for manufactured products from industrial nations and reduces the need for commodities from developing countries.

Less demand slows economic growth in China's trading partners, which are numerous because the Middle Kingdom has become the manufacturing workshop for the world.

In a VOA interview, Lardy said investors watch China with great care in the hope of getting "forward indicators" of the direction and strength of an economy that affects demand for so many products in so many nations.
Under investigation

Employees of one of China's biggest securities firms and one current and one former employee of its market regulator are under investigation on suspicion of illegal stock trading, state media reported Wednesday, amid the collapse of a stock price boom.

Three other brokerages announced they are under investigation for possible violations of rules on confirming the identities of customers.

Authorities have accused securities firms of manipulating prices, suggesting the ruling Communist Party might be trying to deflect blame for the collapse, which angered small investors.

Eight employees of state-owned Citic Securities Ltd., including one surnamed Xu, are suspected of “illegal securities trading,” the Xinhua News Agency said. It gave no other details, but a leading Chinese business magazine, Caixin, reported on its website that Xu was the firm's managing director, Xu Gang.

The police ministry announced July 12 investigators had found “evidence to suspect that individual trading companies are illegally manipulating securities and futures exchanges.” It gave no details of which firms were targeted.
In a statement through the Hong Kong Stock Exchange, Citic Securities said it had received no notice of an investigation.

Phone calls to Citic Securities' headquarters in Beijing weren't answered.

The firm is part of Citic Group, the Cabinet's main holding company. It is best known abroad for its 2012 purchase of Hong Kong-based brokerage CLSA Asia-Pacific Markets from France's Credit Agricole for $1.25 billion in the first major foreign acquisition by a Chinese broker.


Meanwhile, a staff member from the China Securities Regulatory Commission surnamed Liu and a former staff member are suspected of “insider trading and forging official documents and seals,” Xinhua said. It gave no other details.

A journalist surnamed Wang and several other people also are suspected of fabricating and spreading fake securities and futures trading information, the agency said.

It gave no indication whether the cases were connected.

Separately, three brokerages said they were under investigation for possible violation of “know your customer” rules. GF Securities, Haitong Securities and HTSC made their announcements through the Hong Kong Stock Exchange.

In July, the securities regulator accused brokerages of improperly allowing customers to trade without giving their real names or to subdivide accounts to allow others to use them to trade. It ordered brokers to end the practice and to sever ties with unlicensed companies that lend money to finance trading.

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