China's Desperate Stock Market Rescue Could Trigger a US Crash

Chinese regulators privately told investment banks to hold off on new initial public offering applications and postpone big share sales, the Financial Times reported, amid an 8.5% October drop in the CSI 300; Reuters could not verify the instructions. Regulators hope fewer new shares could ease selling pressure. In July 2015, Beijing halted IPOs and barred major shareholders from selling for six months, but the Shanghai Composite still dropped 8.5% on Aug. 24, and the Dow Jones fell over 1,000 points after the open before closing 588 lower; U.S. selling reflected wider worries about China’s slowing economy, not the IPO freeze. Beijing also announced liquidity support and cheaper financing for corporate share buybacks.