New York (HedgeCo.net) – As the Shanghai Composite Index continues its volatile ways with a definite downward skew, Chinese authorities have stepped up their investigations as to what is causing the chaotic swings. According to a recent report from Reuters, some investors are being called in to speak with authorities every two weeks to explain their actions. While the intention from authorities might be to increase confidence, the opposite seems to be happening as fund managers are becoming increasingly uneasy due to the probes.
A particularly interesting part of the article from Reuters was a story from a fund manager charged with buying stocks to revive prices. The manager shared that a colleague had been summoned to meet with regulators and as he left he quipped, “If I don’t come back, look after my wife” and proceeded to hand him his home phone number.
China has made a great deal of progress toward opening their economy and allowing certain aspects of capitalism to be used in the country over the last 30 years. However, the current circumstances and policies that are being used by Beijing have many investors wandering if the openness has its limits.