Attached is 15-minute chart of Shanghai A-Share Index, starting from morning of Aug. 5th to 1:50pm today [August 16, 2013]. If you can not read the numbers very well, the highest is marked as 2191 and the lowest (about the 10th bar from the right starting at 10am today) is 2061. The 5th bar from the right starts at 11:15am and is the last bar before lunch break at 11:30. The 4th bar from the right starts at 1pm and is the first after the lunch break.

There were some huge and sudden buy volumes on large cap stocks right before lunch break. The reason is unclear at this time.

(A small note about this chart: in China rising price bars are red, falling price bars blue or green).

Alex Castaldo adds:

See  this news article "China Trading Error " for a possible  (after the fact) explanation.

Leo Jia follows up:

Everbright Securities has admitted it as a trading error and has petitioned to the authorities to void the trades, but it seems that the authorities didn't approve.

But the complication is what happened after the "error". All stock trades are T+1, so Everbright could not sell what it bought on Friday. To the best it could, it redeemed as many stocks as it could to ETF shares and sold the ETF shares on Friday. It also greatly increased its short positions in the index futures, resulting it being the largest short position holder of the index futures with a total of 7130 contracts. Everbright claims these are all defensive activities.

Clearly all these will cause more stir in this coming week. But what is important is to see how the authorities will treat this case after their investigations. The short positions give people reasons to question that it could very well be a calculated activity to manipulate the market. The hope is that the authorities doesn't open a door now for similar type of manipulations in the future.


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