Financial safety

China’s Manic Traders Test the Communist Party’s Grip on Markets

China’s retail investors are once again testing the limits of the Communist Party’s influence over its financial markets.

The government has in the past month sought to instigate a slow bull market in equities, a typically elusive goal in a country where speculating in momentum and high-turnover trades is a national hobby.

What it got instead was the fastest rally since 2014, when a $5 trillion boom-bust was just beginning, fueled by leverage and hype. This time, the official narrative has quickly changed from encouraging investment to urging rationality, and then taking aim at some of the nation’s hottest stocks. The latest shift in tone triggered one of the biggest losses in the CSI 300 since the bubble burst five years ago.