China Investigating Stock-Price Manipulation Even As Markets Extend Rally: Report

Chinese authorities have begun investigating the possible manipulation of stock prices on Chinese exchanges even as local shares traded at a three-year high on Monday, The Wall Street Journal reported, citing unnamed officials.

The probe will reportedly target “individuals and institutions” that recently bought and sold stocks in certain small-cap companies, according to an official familiar with the matter. Officials of the China Securities Regulatory Commission reportedly expressed fears that the illegal practice involving a group of investors artificially pumping up the prices of certain stocks “is making a comeback.”

The announcement by China’s securities regulator comes amid a bullish trend in the Chinese markets. On Monday, the Shanghai Composite Index -- China’s benchmark index -- closed 0.6 percent higher. The index is up nearly 48 percent year-to-date amid a surge in trading volumes.

The probe comes just days after the regulator warned that illegal activities, including stock manipulation, were “raising their head” in the Chinese market and urged investors to invest “rationally,” according to media reports.