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SHANGHAI, CHINA - THE Shenzhen stock exchange has accused securities regulators of jeopardising market stability by intervening too much while failing to enforce rules, in a rare outburst of criticism.
A research report issued by the exchange, the smaller of the country's two bourses, said the China Securities Regulatory Commission's blanket measures were disrupting market forces.
'The infinite extension of market intervention by the regulatory agency' had 'failed to make up for flaws in market mechanisms and instead hindered the normal play of the market', read the report.
The report, which analysed irregularities in China's stock market last year, was briefly published on Wednesday on the Shenzhen exchange's website, but was then removed.
Analysts have said government meddling has led investors to bet on what the next regulation will be, instead of the fundamentals of listed companies. This has encouraged a herd mentality and frequent boom-bust cycles.
China's stock market almost doubled in 2007, but it has lost 55 per cent of its value since hitting a historical peak hit in October.
The volatility has led many small private investors, who ploughed their life savings into stocks, saddled with heavy losses.
A stock exchange spokesman who gave his surname as Zhang confirmed the report was compiled by the exchange's research unit and said its removal from the site was part of a regular update.
But the report is unusual as the Shenzhen and Shanghai stock exchanges rarely express public criticism of the regulator. Commission officials said they had no immediate comment on the report.
The commission is responsible for approving share issues, educating investors and approving and overseeing all securities-related businesses.
It also has the power to intervene when markets become volatile, the report said.
In the report, exchange officials also complained of weak enforcement and said efforts had been wasted on 'pointless grey areas' while other wrongdoing was neglected.
The report said there had been a substantial increase in illicit trading by senior listed company officials last year and that crackdowns on inside trading and market manipulation were 'not frequent enough'. -- AFP
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