China issues first penalties involving HK stock link

In the spot market, the yuan opened at 6.9052 per dollar and was changing hands at 6.9083 at midday, 47 pips stronger than the previous late session close but 0.14 percent weaker than the midpoint. (Reuters)

SHANGHAI: China’s securities regulator has handed down hefty fines for stock manipulation including what it said was the first case involving the landmark Shanghai-Hong Kong stock connect program.
The China Securities Regulatory Commission (CSRC) said in a statement that it had fined Tang Hanbo and his family-operated group of stock traders more than 1.2 billion yuan ($173.9 million).
They were accused of manipulating several stocks including one Shanghai-listed firm that is traded through the Shanghai-Hong Kong stock connect program, which gives foreign investors access to hundreds of Chinese companies not quoted elsewhere and vice-versa.
Tang, a Chinese mainland citizen, bought and sold the stocks of Zhejiang China Commodities City Group, which is traded through the stock connect program.
He and his associates created fake buy orders to artificially lift the stock’s price before dumping it, the regulator said in the statement issued Friday.
The commission called it the first cross-border market manipulation case under the connect program since its launch.

Yuan firms on weaker dollar
Meanwhile, yuan firmed against the dollar as the greenback slid in global markets and as traders awaited further comments from policymakers at the annual session of Parliament. The People’s Bank of China (PBoC) set the midpoint rate at 6.8988 per dollar prior to market open, 135 pips firmer than the previous fix of 6.9123.
The dollar was weighed down on Friday after some European Central Bank (ECB) policymakers raised the possibility of hiking interest rates before bond purchases end. It was also hurt by US job data on Friday that showed robust hiring but weak wage growth, which some analysts said could prompt the Fed to hike rates at a slower pace.
Traders noted that a Fed rate hike on Wednesday was priced in. In the spot market, the yuan opened at 6.9052 per dollar and was changing hands at 6.9083 at midday, 47 pips stronger than the previous late session close but 0.14 percent weaker than the midpoint.
Markets were also awaiting Premier Li Keqiang’s annual news conference at the end of the National People’s Congress (NPC) on Wednesday. The spot yuan weakened around 0.2 percent to the dollar last week, but the latest China Foreign Exchange Trade System (CFETS) data showed that the index for the yuan’s value based on the market’s trade-weighted basket remained stable, edging down only 0.05 percent to 94.23 on Friday compared with a week earlier.