With confidence in its Communist leadership waning in regard to its ability to manage its economy and the value of its stock market, Chinese leaders have been attempting a plethora of steps to stem the plunge in its stock market. None of them have worked, and neither will the latest move to limit those shorting the market.
Effective immediately, the new rules, initiated by the Shanghai and Shenzhen exchanges, ban traders from shorting stocks on the same day. That of course increases the risk for those shorting the market, which will theoretically decrease pressure on it.
Why this won't work is the issue isn't what the short sellers are doing, it's the reason they are able to do it profitably in the first place, which is the Chinese market hasn't been able to justify it valuation, which is why it has plunged almost 30 percent since June.
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Thursday, August 6, 2015
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