A recent sell-off in China’s stock markets is the first major challenge facing the country since the introduction of margin trading, and is believed to have been caused by hostile short-sellers.
In a report on the Chinese news site ifeng.com, an analyst said the sell-off was similar to what took place in Hong Kong in 1997, when the territory’s benchmark Hang Seng Index plunged 60% after peaking at 16,673 points.
The steep drop in share prices in Hong Kong in 1997 was caused by financier George Soros, who shorted both the Hong Kong dollar and the Hang Seng Index futures, the analyst said, adding that similar practices were observed in the last two trading sessions in China.
According to the analyst, massive funds entered the futures market, building a short position and leading to declines in the stock markets. The size of the funds and the sophisticated…
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