CRI听力:Irregularities Blamed for Market Slump

The Shanghai Composite Index concluded its worst 5-day route since 1996 on Wednesday, despite a central bank interest rate cut aimed at boosting the flagging economy and slumping shares.

The benchmark Shanghai Composite Index did even-out though somewhat, ending down 1.3-percent.

However, this is relatively minor, compared with the over 15-percent loss in value the Index went through the previous two trading days.

Wu Xiaoqiu, market observer with Renmin University, says he believes much of what we've been seeing on the markets can be pinned on market malpractice.

"Complex factors are behind the slump this time and the similar one in July. However, violations such as insider-trading and the rampant fabricating and spreading of false information should be mostly blamed."

He also suggests the economic fundamentals here in China remain sound, saying there's no need for panic selling.

"It's true that Chinese economy is slowing down, but a 7-percent growth rate is still relatively high around the world. It shouldn't be the direct reason leading to the drastic declines on the markets."

The Chinese stock markets have lost more than 40 percent of their value since a debt-fueled rally collapsed in June, prompting authorities to unleash uNPRecedented measures to support the market.

The huge rescue package has included allowing China Securities Finance Corporation, the country's margin-trading service, to buy stocks on behalf of the government.

Authorities have also banned major shareholders from selling their stakes in their companies.

A police crackdown on offending market players is also underway.

A senior executive from China's biggest securities dealer, Citic Securities, and a staff member from the China Securities Regulatory Commission have been asked by police to assist in investigation of suspected violations.

Professor Wu Xiaoqiu says beyond these moves, a lot more still needs to be done to improve the market environment in China.

"The improvement of the trading mechanisms in China is lagging far behind the development of the market, which is still dominated by speculators and lacks deterrents against violations."

Analysts are suggesting the market will remain under selling pressure as investors continue to scramble to cash out.

For CRI, I'm Qi Zhi.