- Head of biggest brokerage probed over market manipulation
- Barclays cut China's GDP forecast this year to 6% from 6.6%
The largest U.S. exchange-traded fund tracking mainland Chinese stocks dropped for a second day in New York amid concern over the economic slowdown and as an investigation into market manipulation widened to include the president of China’s biggest brokerage.
The Deutsche X-trackers Harvest CSI 300 China A-Shares ETF declined 1.4 percent to $31.25 at the close in New York on Tuesday. Investors have pulled $26 million from the fund in the three trading days through Sept. 14. The Shanghai Composite Index had earlier slumped for a second day in thin turnover as investors cast doubt on government measures to support the world’s second-largest equity market and economy are failing.
Cheng Boming, the president of Citic Securities Co., is being probed by the police for insider trading, the official Xinhua News Agency said late Tuesday after the close of mainland trading. The investigation is part of a widening campaign to root out financial wrongdoing and assign blame for the nation’s $5 trillion stock rout. Barclays Plc cut its forecast for the nation’s growth next year to 6 percent from 6.6 percent after data Sunday showed industrial output missed economists’ forecasts.
“Political risk in the region is a heightened concern,” Brad Gastwirth, chief executive officer of ABR Investment Strategy, said in a phone interview on Tuesday. “There are some long-term growth opportunities, but they will likely be overshadowed by the instability right now. ”
Xinhua reported last month that four executives at Citic had admitted to so-called insider trading. The firm is part of Citic Group, the nation’s first state-owned investment corporation, which was set up in 1979 as part of paramount leader Deng Xiaoping’s push to modernize the country.
Since the market crash, China’s targets have ranged from so-called “malicious” short sellers to a journalist from business magazine Caijing whose report was alleged to have caused market panic. Authorities say they want to “purify” the market.
Alibaba Group Holding Ltd. and JD.com Inc. led gains in a Bloomberg index of the most-traded Chinese stocks in New York, which rose 1.4 percent. American depositary receipts of Kandi Technologies Group Inc., a Chinese automaker, rose 4.3 percent to $6.09 after it said its Pure Electric Vehicle model is now qualified for a purchase tax exemption.
Youku Tudou Inc. gained 2.1 percent to $16.41 after it signed a licensing agreement with Paramount Pictures Group allowing some of their films to be seen on the website’s subscription services.
The iShares China Large-Cap ETF, which tracks Chinese stocks traded in Hong Kong, increased 1.3 percent to $36.45, the highest since Aug. 27.