Makes sense. Whoever was behind the ETF buying that led to yesterday's very dramatic reversal, TradingView, 5-day chart, 15-minute prints:
Whoever was behind it could destroy a broker that allowed its clients to get short down here. The brokerage couldn't get the margin calls out fast enough.
Plus, it does take some potential supply off the market as well as sending a very strong message.
From Bloomberg, January 18/19:
China’s largest brokerage has suspended short selling for some clients in mainland markets amid a deepening rout in the nation’s stocks, according to people familiar with the matter.
State-owned Citic Securities Co. has stopped lending stocks to individual investors and raised the requirements for institutional clients earlier this week after so-called window guidance from regulators, said the people, asking not be identified discussing a private matter.
Citic Securities didn’t respond to a request for comment.
Chinese shares have extended declines this year with no sign of a let-up after a harrowing 2023, and the Shanghai Composite Index is having its worst start to a year since 2016. While it’s not immediately clear how many Chinese brokerages are restricting short sales, the move signals China’s eagerness to put a floor under the market, after earlier efforts including state buying of bank shares failed to lift sentiment.
In another sign of official attempts to boost stock prices, trading activity in some major exchange-traded funds surged on Thursday — pointing to potential buying by state institutions....
....MUCH MORE
When you really look at life in China, everything is a policy arm of the Chinese Communist Party.
