1 Six-month share sale ban for China’s major share holders (The Guardian) China’s securities regulator has taken the drastic step of banning shareholders with stakes of more than 5% from selling shares for the next six months in a bid to halt a plunge in stock prices that is starting to roil global financial markets.
The China Securities Regulatory Commission (CSRC) said on Wednesday that it would deal severely with any shareholders who violated the rule. The prohibition is also seen applying to foreign investors who hold stakes in Shanghai- or Shenzhen-listed companies, although most of their holdings are below 5%.
China’s stock markets opened down again Thursday morning. The Shanghai Composite Index was down 2% while the Shenzhen Component Index opened down just over 1%. The announcements came after China’s stock market showed signs of seizing up on Wednesday, as companies scrambled to escape the rout by having their shares suspended and the CSRC warned of “panic sentiment” gripping investors.
More than 30% has been knocked off the value of Chinese shares since mid-June, and for some global investors the fear that China’s market turmoil will destabilise the real economy is now a bigger risk than the crisis in Greece. More than 500 China-listed companies announced trading halts on the Shanghai and Shenzhen exchanges on Wednesday, taking total suspensions to about 1,300 – 45% of the market or roughly $2.4tn worth of stock – as companies sought to sit out the carnage.
The plunge in China’s previously booming stock markets, which had more than doubled in the year to mid-June, is a major headache for the president, Xi Jinping, and China’s top leaders, who are already grappling with slowing growth. China’s cabinet said it planned to spend 250bn yuan ($40.3bn) to foster growth in areas of the economy most in need of support and would accelerate construction of big public services projects.
2 Greece extends bank closures (BBC) The Greek government has extended bank closures and a €60 (£43; $66) daily limit on ATM withdrawals until Monday. The curbs were imposed on 28 June, after a deadlock in bailout talks with creditors led a rush of withdrawals. The European Central Bank has decided not to increase support for Greek banks until the debt crisis is resolved.
Greek PM Alexis Tsipras says he will submit “credible” reform plans on Thursday – ahead of a Sunday deadline by the EU to find a solution. An emergency summit will involve all 28 EU members – not just the 19 eurozone countries. European Council President Donald Tusk has warned that this was now the “most critical moment in the history of the eurozone”.
Greece is desperate for a third bailout to avoid bankruptcy and possibly crashing out of the euro currency. Greece’s last international bailout programme expired on 30 June and it missed an International Monetary Fund (IMF) payment. Mr Tsipras criticised previous bailouts for turning Greece into an “austerity laboratory”.
IMF Managing Director Christine Lagarde reiterated that debt restructuring alongside a programme of reforms was the only way forward for the stricken Greek economy. Greece’s creditors – the European Commission, the European Central Bank and the International Monetary Fund – have already provided more than €200bn in two bailouts since a rescue plan began five years ago.
3 Microsoft cuts 7,800 jobs (San Francisco Chronicle) Microsoft is cutting 7,800 jobs and writing off $7.6 billion in connection with its purchase of Nokia’s phone business, as the giant software maker tries to narrow its focus and pull back from a series of ill-fated forays onto rival tech companies’ turf.
The cuts come on top of 18,000 jobs that Microsoft trimmed last year, just months after the company paid $7.3 billion for Nokia in the hope of expanding its footprint in the smartphone hardware business where Apple and Samsung are market leaders.
Three years ago, Microsoft wrote off another big sum, $6.2 billion, on its purchase of digital advertising firm aQuantive. Microsoft bought aQuantive for $6.3 billion in a bid to increase its role in the online ad sector that was dominated by the likes of Google and Yahoo.
Both the Nokia and aQuantive deals were engineered by former CEO Steve Ballmer, who sought to compete against younger, faster-growing tech companies by expanding beyond Microsoft’s original business of making software for desktop computers.
But Microsoft’s new boss, Satya Nadella, has been pulling back from phone hardware and digital advertising after seeing weak returns on those ventures. Last month, he announced a deal to hand over most of Microsoft’s remaining display advertising business to AOL Inc.
Wall Street seems to prefer Nadella’s strategy of focusing on software and Internet services. Analysts have said the Nokia business was a drag on Microsoft’s profits. That doesn’t mean Microsoft is out of the woods. The company has struggled to adapt as consumers have increasingly turned away from personal computers, in favor of smartphones and tablets that run software made by Apple and Google.