From Bloomberg...
China Approves Short Selling, Margin Lending to Develop Market
Sept. 26 (Bloomberg) -- China's cabinet agreed to let investors buy shares on credit and sell borrowed stock to help develop Asia's second-largest market after prices and trading volumes slumped, an official familiar with the plan said.
The State Council signed off on a China Securities Regulatory Commission plan submitted this month to allow margin lending and short selling, said the official, who declined to be identified as he isn't authorized to speak on the issue.
The Chinese are learning fast, folks. The past weeks have simply confirmed suspicions that they've had for awhile: that China can no longer rely solely on other capital markets around the globe to provide the liquidity needed to support growth in their economy. They've got to start doing it themselves.
And why bother propping up foreign institutions when you can pour your hard-won RMB into some of your own?
China Investment Corp., the nation's $200 billion sovereign wealth fund, bought shares in Industrial & Commercial Bank of China Ltd., Bank of China Ltd. and China Construction Bank Corp., the nation's three largest state-owned banks, in the past week, after a 58 percent slide in the CSI 300 this year. The index is headed for its first weekly gain in nine weeks.
China is building their own markets, with their own financial instruments, with their own money. They're talking about starting their own domestic currency market for the first time, and Chinese banks are issuing RMB backed corporate bonds in Hong Kong.
And despite a brief lapse against the dollar in August, the Chinese yuan keeps increasing in value against other currencies as well.
The Chinese, like the rest of us, are realizing that the once almighty USD is passé. We will have little choice but to come along for the ride.