China seeks curbs on short selling, creates 12.44m new urban jobs in 2023
Business
The blue chip CSI300 Index plunged to near five-year lows this week
SHANGHAI/BEIJING (Reuters) – China's securities regulators have asked some hedge fund managers to restrict short selling in its stock index futures market, two sources said, as authorities seek to stabilise sinking stocks.
The blue chip CSI300 Index plunged to near five-year lows this week, prompting fresh vows by the government to steady capital markets.
A hedge fund manager said he received calls from China's financial futures exchange, cautioning against reckless short selling, especially "naked" short selling that is not conducted for hedging purposes.
Another hedge fund source said the exchange had informally asked his firm recently not to short sell for speculative purposes.
"Shorting is profitable in a falling market," the source said. "But if you get calls from the exchange, you get the message that you should no longer short sell to make a profit."
The sources spoke on condition of anonymity.
The China Financial Futures Exchange (CFFEX) did not reply to a Reuters request for comment. Nor did the China Securities Regulatory Commission (CSRC), which oversees the exchange.
China's stock market tumbled 13pc in 2023 and has extended its slide in the new year amid relentless foreign selling, a deepening property crisis and shaky economic recovery.
On Tuesday, CSRC Chairman Yi Huiman vowed to safeguard stable operation of the capital markets with full force. China's State Council, or cabinet, also pledged more forceful and effective measures to support market confidence.
The sources said regulators did not spell out specific curbs in their informal guidance, but hinted that shorting activities using stock index futures would be curbed.
Some investors were nudged to unwind their heavy short positions as soon as possible, the sources added.
The window guidance - unwritten instructions from regulators - came amid signs of a spike in shorting interest.
Futures contracts on the small-cap CSI1000 Index due in Sept 2024 tumbled on Monday by the daily maximum limit of 10pc, to trade 8pc below the underlying index. Turnover of the futures contracts also spiked.
Heavy stock index futures selling was partly due to risk management activities as losses on billions of dollars of derivatives linked to China's equity indexes forced a vicious cycle of selling in stocks and futures contracts.
12.44 MILLION URBAN JOBS ADDED
China created 12.44 million new urban jobs last year, meeting its target, but more efforts are needed to prop up employment amid uncertain economic conditions in 2024, the country's human resources ministry told a press conference on Wednesday.
China set a goal to create around 12 million urban jobs in 2023. The job creation goal for this year is expected to be unveiled at the opening of the annual parliamentary meeting in March.
"China's economic operation has become more uncertain with weak social expectations in 2024," said Yun Donglai, deputy director of the ministry's employment promotion department.
"The pressure on total employment will not decrease in 2024, and more efforts will be needed to stabilise employment," said Yun.
Yun said more prominence would be given to priority targets, such as strengthening support for youth employment, including college graduates, and expanding job opportunities for them.
The world's second-biggest economy grew 5.2pc last year, meeting the government's target, but it is burdened by a protracted property market downturn, weak consumer and business confidence, and mounting local government debt.
As businesses remained wary of adding workers in the face of uncertainties, a nationwide survey-based jobless rate increased to 5.1pc in December from November's 5.0pc, official data showed last week.
For the full year of 2023, the average nationwide survey-based jobless rate dropped to 5.2pc from 5.6pc in 2022.
In a competitive job market, some Chinese college graduates are trading down to find a source of income as the youth jobless figure rose to a record high of 21.3pc in June last year.
The National Bureau of Statistics resumed the publication of youth unemployment data in December after a five-month suspension. The December survey-based jobless rate for 16-24 year-olds, excluding college students, was at 14.9pc.
