China Opens Stock Market Today... Injects Liquidity and Bans Short Selling to Absorb Shock

[Asia Economy Beijing=Special Correspondent Park Sun-mi] The Chinese financial market, which had been closed since the 23rd of last month due to the Spring Festival (Chinese New Year) holiday and measures to prevent the spread of the novel coronavirus infection (Wuhan pneumonia), will reopen on the 3rd. To minimize the financial market shock, China is implementing measures such as injecting liquidity and banning short selling in the securities market.

The People's Bank of China will inject 1.2 trillion yuan (approximately 205 trillion won) of liquidity into the market through open market operations on the 3rd. The People's Bank explained that the liquidity injection is a measure to provide reasonable and sufficient liquidity during this special period requiring prevention and control of the novel coronavirus and to ensure the stable operation of the financial market. The People's Bank stated, "With this liquidity injection, the total liquidity in the banking system will be 900 billion yuan more than the same period last year."

The Chinese securities authorities are also on high alert. Since the Chinese stock market, which had entered the Spring Festival holiday from the 24th, will reopen on this day, there is a growing possibility that the market shock during the closure period will be fully reflected. The China Securities Regulatory Commission (CSRC) announced through the Communist Party's official newspaper, the People's Daily, that "the impact of this virus on the stock market is short-term," but also stated that "vigilance against abnormal signals will be strengthened," entering a state of preparedness.

To minimize market shock, a ban on short selling has been imposed on the securities industry.

According to sources, the CSRC has verbally instructed major securities firms and investment banks, including Zhongxin Securities and China International Capital Corporation (CICC), to ban short selling starting from this day.

The CSRC is also considering disclosing risk-hedging measures that can offset the current market panic situation. The evening trading session of the futures market, scheduled to start immediately, will be suspended for the time being.

Within the securities industry, there is a perception that the measures issued by the securities authorities ahead of the market reopening are mandatory. According to the Hong Kong South China Morning Post (SCMP) on this day, Zhongxin Securities conveyed in a message to its branch employees that the measures such as the short selling ban in accordance with the authorities' instructions carry political significance as a task to stabilize the market plunge on the first day of reopening.

This content was produced with the assistance of AI translation services.