A timeline of the decline of China’s main stock market index from its June 12 peak and government efforts to shore up prices:
– June 18: Regulators order Chinese brokerages to limit short selling, which the state media later blame for the slide in share prices.
– June 27: Beijing announces a surprise interest rate cut – its fourth since November – in what analysts say is a move to reassure investors that recent changes in bank regulations are not aimed at limiting credit to finance stock trading.
– June 29: The government announces its main pension fund for civil servants will be allowed for the first time to invest up to 30 percent of its assets in stocks. Based on the fund’s size, that would be up to 900 billion yuan ($145 billion).
– July 1: Mainland China’s two stock exchanges in Shanghai and Shenzhen announce a 30 percent cut in trading fees.
– July 3-5: Regulators cancel initial public stock offerings in response to fears of too little demand. Capital of the state-owned China Securities Finance Co., which provides credit to finance stock trading, is increased from 24 billion yuan ($4 billion) to 100 billion yuan ($16.1 billion). A group of 21 state-owned brokerages create a 120 billion yuan ($19 billion) fund to support prices by purchasing shares.
– July 8: Beijing prohibits stock sales for at least six months by major shareholders and orders executives and board members of companies to buy back any shares in their own companies that were sold in the past six months. They also are told to buy more if the price falls by 30 percent in the following 10 days. The insurance regulator announces insurers will be allowed to increase the amount they invest in stocks from 30 percent to 40 percent of total assets. Brokerages increase the size of their stock-buying fund to 260 billion yuan ($42 billion). An arm of China’s $750 billion sovereign wealth fund says it will buy exchange-traded funds and avoid selling shares. China Securities Finance Co. injects a total of 200 billion yuan ($32 billion) into five mutual funds to buy shares.
– July 8: The number of companies that suspended trading in their shares passes 1,000 out of a total of 2,802 traded on mainland exchanges. Many cite impending announcements about possible mergers or employee purchases of stock – moves that stem from Beijing’s effort to shore up prices. The suspensions freeze prices and leave shareholders unable to sell.
– July 13: The police minister says some brokerages have been found to have improperly manipulated futures exchanges, a possible reference to short selling. It says a criminal investigation is underway but gives no details. The securities regulator orders brokers to stop allowing customers to lend use of their accounts to other traders. Brokers are ordered to sever ties with unlicensed companies that provide credit to finance share trading.
– Aug. 14: In a move toward restoring normal market operations, regulators ease the moratorium on new share issues and announce 14 publicly traded companies will be allowed to raise money by selling stock. The China Securities Finance Corp. says shares it has bought will be transferred to China’s sovereign wealth fund in an apparent gesture to reassure investors they will not flood back into the market and depress prices.
– Aug. 19: The Shanghai index declines 5 percent but rebounds in the last minutes of trading to close up 1.2 percent in what financial analysts say might have been the last major intervention by the China Securities Finance Corp.
– Aug. 24: The Shanghai index falls 8.5 percent in its biggest one-day loss in eight years with no sign of government buying. It ends the day down 38 percent from its June 12 peak and just under 1 percent below its close on Dec. 31.
– Aug. 25: The Shanghai index falls for a fourth day, declining 7.6 percent to an eight-month low.