Regulator stays broker sell orders to stem equity rout

China’s securities regulator tapped some brokerages and funds to support the stock market amid an onslaught of selling on concern the rapidly spreading Wuhan coronavirus will deepen a slowdown in the economy, people familiar with the matter said, Bloomberg reports.

The China Securities Regulatory Commission told some brokerages that their proprietary traders aren’t allowed to be net sellers of equities this week, said the people, asking not to be identified discussing a private matter.

Brokerages are today only allowed to sell to meet redemptions by investors, according to the people. Shares nevertheless plummeted, posting the biggest declines since an equity bubble burst in 2015.

Chinese authorities have a long history of intervening to limit losses in equities -- both directly and through issuing guidance to brokerages -- with mixed success.

While state buying is credited with helping to end the rout in 2015, there was a US$5 trillion wipeout before the recovery started to take hold.

Regulators unveiled a package of measures over the weekend to ensure stability of its US$45 trillion financial system as the nation stepped up the fight against the virus outbreak. The central bank cut rates and supplied 1.2 trillion yuan to money markets today.

The CSRC said it would halt night sessions for futures trading and allow some share pledge contracts to be extended by as long as six months.

The CSI 300 Index dropped by 9.1 percent as onshore financial markets opened for the first time since Janauary 23. It fell by 8.2 percent as of noon.