The 2015 Chinese stock market crash wiped out an estimated $5 trillion in value of global stocks and Chinese authorities have apparently found the person who triggered this devastating ripple effect.
The crash, which first began on June 12, has caused a staggering decline of almost 40 percent. Individual investors have lost millions while markets across the world have also suffered greatly as a result.
And the man behind it all is a journalist named Wang Xiaolu, who has confessed that his sensationalized coverage of the stock market and stories built around baseless rumors caused panic among investors.
In the confession, which aired on China’s state-owned TV channel, Wang takes full responsibility of his fabricated reports.
One particular piece written for Caijing on July 20 did the most damage.
In it, he wrote that China Securities Regulatory Commission intends to refrain from supporting and stabilizing share market prices in the future. The truth was that the CSRC had no such plans. However, local investors believed Wang's fictional report and began cashing out of the market in scores to save their investments.
The report marred all the hard work done by CSRC in the prior weeks to stabilize the market. The worst happened on July 27, roughly two weeks after Caijing ran Wang's story, when the Shanghai index fell by a massive 8.5 percent – by far the biggest single-day plunge in Chinese markets since 2007. The cause of decline was eventually traced back to Wang, who was arrested a month later.
Xinhua reports that Wang admitted that his story "caused panics and disorder at stock market, seriously undermined the market confidence, and inflicted huge losses on the country and investors [sic]."
He added that he was deeply sorry and that “at such a sensitive time, I should not have published a report that negatively affected the market.” Wang further said that he had “caused great losses to the country and to investors” all for the sake of sensationalism.
Unfortunately, no amount of regret on Wang's part is going to bring back the hard-earned money of millions of people around the world.
While Wang has been caught, some responsibility also lies with the editorial team that ran his story without verifying his sources.