Further to our recent posts on the fat fingered Chinese broker Everbright ( or not-so-bright as some of our readers have pointed out ) Securities Reuters is now reporting that they’re being forced to sell assets to cover potential losses incurred.
The trading system error on Friday left them long of USD 1 bln in mainland shares which the regulators say they can’t sell for 3 months. Add to that the undoubted compensation claims coming in from less than happy investors .
Board member Mei Jian has said today:
We will use our own funds, disposal of securities assets and utilise other financing channels to resolve any future liquidty problems
Interestingly many observers are now pointing to an inherent flaw in the market trading systems with the official Chinese Securities Journal today saying that the malfunction has exposed major flaws in how the Chinese stock exchanges are run.
I guess we shouldn’t be too surprised by that but this one will run and run for a while yet and add to the uncertainty over China moving forward.