A private investor smiles in the customer lounge of a stock market in Beijing./ Source from Cankaoxiaoxi

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By Hong Soon-do, Beijing correspondent, AsiaToday - Chinese authorities are unleashing a volley of measures to try to stabilize the shaky stock market. The stock market is likely to recover stability to a certain extent as a result, however, it's uncertain if the effects will sustain.

According to Sept. 6 reports of China's state-run media outlets including Jing Ji Ri Bao, one of the most powerful measures recently launched by China's financial authorities including the China Financial Futures Exchange (CFFEX) would be restricting the Chinese stock index (CSI) 300. Opening more than 10 contracts on a single index-futures product on the CSI 300 index will be defined as "abnormal trading" starting Sept. 7. Besides, the CFFEX increased margin requirements for both non-hedging and hedging futures contracts from 30% and 10% to 40% and 20%, respectively. Fees for settling positions that were opened on the same day are also raised from 0.0115% to 0.223%.

All these measures are applied starting on September 7. If they are settled, China-based private investors and small corporations will likely to lose ground to big corporations. A Korean entrepreneur "Y", who is running a small corporation in Shanghai, strongly criticized the government, stating, "Such measures can be seen as the tyranny of the authorities. Such measures are way too amateurish." However, it seems that the authorities have no easy options. In other words, the measures are a part of the authorities' desperate attempt to stabilize the stock market.

China is also making a strong move to combat the short selling. Chinese authorities are probing executives of state-owned Citic Securities, one of China's biggest securities firms, and others for possible stock crimes. It is expected that China will continue to strengthen the crackdown. The authorities are also probing investors and analysts spreading malicious rumors.

Currently, the benchmark Shanghai Composite Index remains at the level of around 3,000. In some cases, the index breaks the psychologically important 3,000 level. However, if measures for market stabilization work well, there's a little chance that the index would fall below the 3,000 level. This is why the Chinese authorities are launching strong measures recently.