In China, when it comes to stocks, it turns out that love isn't blind. China's wealthiest are finding themselves in the spotlight as divorce rates are on the up, prompting the country’s securities regulator to step in and put the brakes on swift post-breakup stock selloffs. The cynics at the regulator’s office smell something a little fishy.

At the heart of this crackdown is a rule that limits bigwigs who hold a chunky 5% or higher stake in a company from offloading more than 2% of their precious shares into the market within 90 days. Moderation in all things, I guess.

Something in the air?

Why the fuss? Well, it turns out that the heads of some of China's biggest listed companies decided to cash in and feign (or acknowledge) marital woes by unloading substantial chunks of shares right after ditching their spouses. It sounds like a real-life episode of Real Housewives of Beijing – and if that isn’t a thing, it should be - with couples calling time on their marriages and reaping the financial rewards.

According to Bloomberg's sleuthing, at least eight heavyweight shareholders in China's listed firms did this share-shifting dance, to the tune of a jaw-dropping $3.9 billion, no less.

After their split, half of these freshly uncoupled duos then announced plans to throw their shares onto the market, just weeks or months after the ink dried on their divorce papers. Talk about swift emotional healing, or should we say, swift emotional stock dumping?

The star of this stock divorce show was electronics firm Suzhou Secote Precision Electronic, where the company's chairman, Sun Feng, handed over a whopping $192 million worth of shares to his ex back in January. Now, that's what we call an expensive goodbye gift.

As for why these tycoons and tycoonettes decided to part ways, well, that remains a mystery. Maybe they just figured that it's cheaper to pay alimony in stocks than in cold, hard cash, or maybe it was all about property taxes.

But the China Securities Regulatory Commission (CSRC) wasn't having any of it and decided to address the market’s concerns. Before the crackdown, even with the 2% share sale limit, bigwigs could still sell up to 4% of their cherished stock post-divorce. But the CSRC has pledged to close this seemingly convenient loophole.

Not to be outdone, the Shanghai Stock Exchange and Shenzhen Stock Exchange chimed in, declaring that they would stick to the same 2% share sale limit for major shareholders, even after their marriages went kaput, you can apparently break hearts, but the rules don’t change.

Tough times for Chinese markets

All this stock market drama unfolds against the backdrop of Beijing's desperate attempts to revive its sluggish economy and shaky markets, still nursing their wounds from the COVID-19 pandemic. If we’re still talking in terms of divorce, investors decided to break up with Chinese stocks in style, dumping a record-breaking $12 billion worth just last month. Relationship over, time to get out. Funnily enough, real-life divorces also spiked at the end of the COVID lockdowns.

In response to the market's heartbreak, the Chinese government has pulled out all the stops, akin to buying some gas station flowers, it unveiled new initiatives like reducing required collateral and imposing a tax on stock transactions. Time will tell.

So, what's the verdict? Well, the Shanghai Composite is having a lukewarm year, up by 1%. Meanwhile, the CSI 300 Index, which tracks mainland stocks, is having a bit of a wobble and is down by about 3.5%. Let's hope they can work things out.

As for the CSRC and Suzhou Secote Precision Electronic, they've kept their lips sealed, probably busy attending stock market therapy sessions or swiping right on some new investment opportunities. Love and stocks, after all, can be quite the rollercoaster ride.