BEIJING • Faced with a renewed stock market slide that has wiped out US$5 trillion (S$7 trillion) in trading value, China is on the prowl for scapegoats.
The authorities yesterday announced a probe into allegations of market malpractice involving the regulator, while the official Xinhua news agency called for efforts to "purify" the capital markets. It also carried remarks by a central bank researcher attributing the global rout to an expected hike in interest rates by the US Federal Reserve.
The Shanghai Composite Index has plunged more than 40 per cent from its peak, after concerns over China's economy helped snap a months-long rally encouraged by state media.
The authorities have repeatedly blamed market manipulators and foreign forces since the sell-off began in June and led officials to launch an unprecedented programme to support stocks. Now, after suspending that programme, the administration has embarked on a new round of fault-finding.
"The authorities have been too involved in the stock market and now they're trying to pass the responsibilities to others," said economics professor Hu Xingdou of the Beijing Institute of Technology.
Police are investigating people connected to the China Securities Regulatory Commission, Citic Securities and Caijing magazine on suspicion of offences including illegal securities trading and spreading false information, Xinhua reported.
Another Xinhua report citing Dr Yao Yudong, head of the People's Bank of China's Research Institute of Finance, attributed the global market rout to expectation of a Fed rate increase next month, not concern about the Chinese economy.