Chinese Regulators Probe Monday’s Stocks Selloff as Rout Deepens

Chinese Government Support Tested as Stocks Extend Rout

China’s securities regulator is investigating the stocks selloff on Monday that sent the nation’s benchmark index to its biggest loss in eight years.

The China Securities Regulatory Commission set up a legal enforcement taskforce on Tuesday to check for clues related to the large-scale selling, spokesman Zhang Xiaojun said in a statement on the regulator’s website. The CSRC will examine stock exchanges’ monitoring and complaint reports, without giving more details.

The probe is the latest effort by the government to crack down on reports of market manipulation after a recent equities rout wiped out nearly $4 trillion. China is investigating companies in Shanghai’s free-trade zone that may have exploited looser policy controls to manipulate the market, people familiar with the matter said last week. The Ministry of Public Security said this month it’s helping the securities regulator look into evidence of “malicious” short selling of stocks and indexes.

The Shanghai Composite Index fell 1.7 percent to 3,663 on Tuesday. The gauge tumbled 8.5 percent the day before, the most since February 2007, amid speculation the government was scaling back its support for the stock market. The CSRC said in a statement after the market close on Monday the government hasn’t withdrawn support for equities.

— With assistance by Shidong Zhang

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