光大证券周一股价跳水

China Everbright’s share price dropped by 10 percent this morning, resulting in an automatic suspension from trading, after authorities slapped a hefty penalty on the company for an illicit trading incident last month. Analysts say authorities are unlikely to stop at this punishment, and that further reforms are expected.

The company says two additional senior officials of the company have now resigned, bringing the total of banished executives to five in the last week and six in total.

"These penalties show how such violations will be punished in future, depending on who is at fault, exactly what happened, and how much money is involved. The authorities’ quick reaction to this incident shows great determination." Prof. Zhang Huiming, Fudan University said.

On Aug. 16 a trading error by Everbright drove the market up substantially, but the company then shorted the market for an hour before reporting the error, for a profit of some 87 million yuan. China’s securities regulatory commission last week fined China Everbright 500 million yuan for the incident, about half of the company’s total profits for the past year. But Zhang says this does not mean the end of the official investigation.

"We need to consider how both the authorities and the stock exchange should respond to abnormal market movements. There should be a way to deal with them such as temporary trading suspensions, for example, which have not been employed this time." Prof. Zhang Huiming said.

The regulatory commission has confirmed that investors will be allowed to seek compensation from the incident. Estimates say that investors could have lost around 2 billion yuan on the day of the incident.