TOKYO - Chinese shares plunged about 8 percent Monday after the country's securities regulator imposed margin trading curbs on several major brokerages, a sign authorities are worried about the market's big gains. Other markets in Asia and Europe were mostly higher.
CHINA CURBS: The China Securities Regulatory Commission imposed curbs late Friday on margin financing, or borrowing to purchase stocks, following an investigation of the industry. The three affected brokerages, Citic Securities Co., Haitong Securities Co. and Guotai Junan, were forbidden to lend money and shares to new customers for three months after they allegedly were caught extending margin trading contracts in violation of the rules. The Shanghai Composite has soared almost 60 percent in the past year. Investors fear regulators believe prices have risen too much recently and might impose more curbs.
THE QUOTE: Dickie Wong, executive director of research at Kingston Securities in Hong Kong, said regulators want to tamp down some of the riskier financing practices underpinning the mainland Chinese stock market's astonishing surge. With the rally "overdone," regulators want to "simply give pause" to the brokerages, he said. "The recent bull market is mainly driven by margin financing." Mainland Chinese regulators allowed margin financing and short selling only in recent years and Wong said many mainland investors may still be unaware of the risks involved.
MORE CHINA, ECB: Investors are awaiting China's economic growth data due Tuesday, which is likely to show a further slowdown in the fourth quarter, and are also anticipating possible stimulus moves by the European Central Bank. Markets generally settled down after volatility provoked by the Swiss central bank's shock decision Thursday to untether the Swiss franc from the euro. Japan's central bank is not expected to make any major moves in a policy meeting that wraps up Wednesday.
ASIA SCORECARD: Japan's Nikkei 225 rose 0.9 percent to 17,014.29 after a government report showed rising consumer confidence. South Korea's Kospi gained 0.8 percent to 1,902.62. Australia's S&P/ASX 200 rose 0.2 percent to 5,309.10. Shares were also higher in Taiwan, New Zealand and Southeast Asia.
ENERGY: Benchmark U.S. crude was down 51 cents at $48.18 a barrel on the New York Mercantile Exchange just before midday in Europe. The contract jumped $2.44 on Friday to settle at $48.69. Brent crude, a benchmark for international oils, fell 36 cents to $49.81 a barrel in London.
CURRENCIES: The euro rose to $1.1598 at midday in Europe from $1.1561 late Friday. The dollar dropped to 117.40 yen from 117.57 yen.