China is reportedly taking an extraordinary step to stop its stock market from crashing. Beijing tried the same strategy in 2015. It failed to contain the selloff, and weeks later, Wall Street suffered one of its worst trading days in years.
According to the Financial Times, Chinese regulators have privately instructed investment banks to pause new IPO applications and delay large share sales. Reuters could not independently verify the instructions.
The idea is that fewer new shares competing for investors’ money could reduce selling pressure on existing stocks.
But history shows that its impact could spread to the US stock market.
China Tried This in 2015. Wall Street Crashed Weeks Later
In July 2015, Beijing suspended IPOs and banned major shareholders from selling for six months.
The measures initially offered relief, but the crisis continued.
On August 24, China’s Shanghai Composite plunged 8.5%. The Dow Jones then collapsed more than 1,000 points shortly after opening, before closing 588 points lower.
The US selloff reflected wider fears about China’s slowing economy. The IPO freeze itself did not cause the American crash. Both markets eventually recovered, and China resumed listings that November.
Could the Same Thing Happen Again?
China’s CSI 300 lost 8.5% in October, its worst monthly performance in more than a decade. On Tuesday, the technology-heavy STAR 50 fell another 3.81%.
Beijing has announced new liquidity support and cheaper financing for corporate share buybacks.
Meanwhile, Wall Street is already struggling with its own AI selloff. The Nasdaq-100 entered correction territory on Monday, falling more than 10% from its October peak.
Morgan Stanley warned in late October that Chinese stocks could fall another 10% to 15% before reaching a bottom.
The biggest risk for US investors is a deeper Chinese downturn adding to existing concerns over AI valuations. The 2015 crash shows how quickly fears about China’s economy can unsettle global markets.
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