 |
| Dazed and confused by PRC stocks...must be those Westerners doing evil things. |
Here's another news flash from the clash: To no one's real surprise, foreign devils [
gweilo] stand accused of dastardly market machinations to profit at the expense of Chinese investors by shorting shares. Nevermind that (a) foreigners are quite limited in their abilities to trade locally-issued shares and (b) Chinese officialdom has implemented the very mechanisms that make it possible to short shares. At any rate, onto these
acts of evil:
A crackdown on traders in China that included Chicago-based Citadel LLC has shone a light on the few foreign investors to have set up shop in a country long wary of outside influence. An account trading the firm’s own money was one of more than three dozen accounts suspended from trading over the past week after Chinese authorities launched a probe into automated trading and possible stock-price manipulation.
“We continue to otherwise operate normally from our offices, and we continue to comply with all local laws and regulations,” a Citadel spokesman said this week. Not many foreign firms have penetrated China’s massive mainland markets with a local trading outfit as Citadel has. Instead, most rely on the limited routes that have been opened to foreigners, such as a stock-trading link formed with Hong Kong last year that allowed overseas investors to freely trade some Shanghai-listed shares for the first time.
Still, it's a head-scratching leap to blame foreigners when the volumes they can trade are so limited on the mainland:
With their investment capped at less than 5% of the market, foreign investors outside of China continue to make up a only small sliver of China’s $8 trillion stock market. Some traders say they have been spooked by the crackdown on Citadel and others. “Even Chinese fund managers don’t want to sell stocks right now,” said one foreign investor in China.
Citadel founder Kenneth Griffin recently expressed a positive outlook for his firm in the country. “When I think about the next 10 years, we are going to have a very meaningful business in China,” Mr. Griffin said in one of several interviews conducted before the suspension for a page-one article in The Wall Street Journal.
Blaming the foreigner is ever-so-easy to do when, most of the time, the failings lie with oneself.
