In an effort to prevent an all-out stock market collapse, Chinese financial regulators have announced a 6-month ban on stock sales by major shareholders, directors, and executives of publicly listed companies, effective immediately.
Under the new China Securities Regulatory Commission (CSRC) rules, anyone investor with more than a 5% stake in a company must maintain that position.
The ban includes foreign investors in mainland China businesses.
The national regulators have already banned new IPOs as nearly $3 trillion in equity value has disappeared in the last few weeks. Brokerage houses have been instructed to buy billions of dollars of shares in local companies and government institutions have also been instructed to buy up.
To stem the bleeding, over 1200 companies on Chinese exchanges have requested a trading halt, which is more than half of all the companies on the Shanghai and Shinzen exchanges.
Shares in Shanghai dropped 5.9% Wednesday, despite the government-backed buying programs and rules that halt trading when a stock drops by 10%. Shenzhen dropped 2.5% on the day. The two markets are down around 35% in the last six weeks.