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￥0.9b fine for market rigging
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Lin Min
IN what could be an historic move to clean the market manipulation which bedevils the nation's unruly stock market, China's securities watchdog for the first time imposed a hefty fine on four companies which created the boom-and-bust legend of the country's only 100-yuan (US$12) stock.
The China Securities Regulatory Commission (CSRC) on Wednesday decided to impose a fine of 449 million yuan on four Guangdong investment companies which the CSRC said propped up the price of Shenzhen-listed Yorkpoint, formerly known as Shenzhen Jinxing. The price rigging made Yorkpoint the country's most expensive stock, sending it skyrocketing from 5.6 yuan in August 1998 to 126.31 yuan last February.
The watchdog also confiscated the illegal gains of 449 million yuan pocketed by the four firms behind the scam.
The CSRC said in its decision that the four companies, Guangdong Xingsheng, Guangdong Zhongbai, Guangdong Baiyuan and Guangdong Jinyi investment consulting firms, bought and sold Jinxing shares among themselves in 627 individual accounts and three corporate accounts, ballooning transaction volumes and sending the price soaring.
Yorkpoint set a record in China's stock market by becoming the first stock to top 100 yuan and reached its highest-ever price of 126.31 yuan in February.
Yorkpoint, renamed in August 1999 to borrow the market-friendly high-tech concept, roared from 26 yuan on October 25 to break the barrier of 100 yuan on February 15, 2000, in just 70 days, sending the market to a mixture of euphoria, shock and worries.
The CRSC's investigations, though, unravelled the legend by revealing the stock price was purely the result of manipulation: the accounts controlled by the four companies held as much as 85 per cent of Yorkpoint's total flotation in last January.
Yorkpoint yesterday nosedived 6.37 per cent to close at 26.18 yuan, following a fall of nearly three per cent on Wednesday.
Lin Rui, an analyst with Ping'an Securities, yesterday told Shenzhen Daily that the market, although ready for the CRSC's house-cleaning move, was surprised at the huge amount of the penalty.
However, the move did not trigger a panic selloff, eroding both Shenzhen and Shanghai composite indices by more than two per cent on Wednesday and more than one per cent yesterday.
"The decline just reflected fears of institutional investors. the CRSC's move should be good news for retail investors," said Lin.
"The case serves as a good example of where the bottom line is, so institutional investors will become less aggressive," he added.
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