Markets brighten as CSRC takes aim at Everbright

Stock markets on the Chinese mainland ended higher Monday as regulators responded to concerns which surfaced late last week following an unexpected spike in volatility.

The Shanghai Composite Index gained 17.15 points, or 0.83 percent, to close at 2,085.60; while the Shenzhen Component Index advanced 117.64 points, or 1.44 percent, to finish at 8,285.72. Combined turnover of the two exchanges decelerated to 177.24 billion yuan ($28.95 billion). down from Friday's 244.85 billion yuan total.

The China Securities Regulatory Commission (CSRC) announced late Sunday that it was investigating Everbright Securities Co for its involvement in a sudden surge in turnover last Friday which sparked turmoil among investors. The regulator stated that the incident stemmed from a glitch in one of Everbright's trading systems and was not an attempt to manipulate the market.

In a separate matter, Everbright made news Monday after a trader at its fixed income division mistakenly sold 10 million yuan in government bonds with a yield of 4.2 percent, 25 basis points above the yield on the same bonds last Friday.

These high-profile lapses undermined confidence in securities shares, which gave up an average of 1.48 percent on the day. Southwest Securities Co Ltd fell 3.84 percent to 9.01 yuan, Sealand Securities Co Ltd shed 3.77 percent to 12.75 yuan, and Northeast Securities Co Ltd pulled back 3.32 percent to close at 17.45 yuan.

On the upside, listed property developers rose by an average of 0.85 percent after data released over the weekend by the National Bureau of Statistics showed residential home prices rising in July. Specifically, prices in 62 out of 70 urban markets increased during the month compared with June.

The electronics, telecoms and home appliance sectors performed strongly as well, with components jumping by averages of 4.39 percent, 4.18 percent and 3.54 percent respectively.