A selloff in Chinese stocks continued on Monday, especially in Hong Kong that is edging lower to the lowest level in almost two decades, as a lack of fresh economic stimulus and the announcement of maintaining loan rates dropped market’s sentiment.
Earlier this morning, China announced that it will keep one- and five-year loan prime rates at 3.45% and 4.2%, respectively, which disappointed investors betting on measures to boost the economy.
The Hang Seng China Enterprises Index fell as much as 2.6%, which is close to the lowest level not seen since 2005 and also making it one of the worst performers among key markets in Asia. Meanwhile, the tech stocks were down more than 3%.
Last week, Bloomberg reported by citing people with knowledge of the matter that China’s largest brokerage, Citic Securities, has restricted short-selling for some clients following noticeable losses in local stock markets.
Not only did Citic Securities stop lending stocks to investors, it also raised requirements for institutional clients earlier this week as well, which turned out to be instructions from regulators.
A week before that, Beijing reportedly told its major brokerages to support local stocks and funds by purchasing exchange-traded funds off the open market.
