The new head of China’s securities regulator has been tasked with restoring confidence after policy missteps by his predecessor rattled investors and helped deepen a US$5 trillion stock market rout.
China Securities Regulatory Commission (CSRC) Chairman Liu Shiyu (劉士餘) is assuming the oversight of the world’s second-largest stock market in the wake of last summer’s slump, which saw former CRSC chairman Xiao Gang (肖鋼) criticized for mismanagement.
In addition to needing to rebuild morale among China’s about 99 million investors, Liu is set to preside over an overhaul of initial public offerings, the planned expansion of a trading link with Hong Kong and a campaign to get the nation’s shares included in MSCI Inc’s global indexes.
Photo: AFP
Under Xiao — who was in the post less than three years — looser controls over leverage helped triple the value of Chinese equities to US$10 trillion before share prices collapsed last summer.
Liu was previously the chairman of Agricultural Bank of China Ltd (AgBank, 中國農業銀行), the third-largest lender in China.
One of Liu’s most important tasks will be to oversee the introduction of a more market-based registration system for initial public offerings, expected to be unveiled later this year.
The new regime would leave the questions of initial public offerings supply and timing to companies and the market, rather than the CSRC, and give firms more power to determine pricing.
Investors are still awaiting an exchange link between Hong Kong and Shenzhen, modeled on the Shanghai one that began in November 2014.
MSCI has said that giving foreigners more access to China’s second-largest equity market — home to many of its small technology companies — is key to getting the nation’s stocks included in global gauges.
The index compiler refrained from taking that step in June last year, saying China still needed to make shares easier for foreign investors to access.
The decision came before the summer rout spurred state intervention that was criticized by global asset managers.
Xiao last month acknowledged mistakes after a review of the turmoil.
An immature bourse and participants, incomplete trading rules, an inadequate market system and an inappropriate regulatory system were to blame and regulators will learn from the experience, he said.
In one of the most high-profile missteps, the CSRC scrapped circuit breakers in the same week it introduced them.
The implementation of the circuit breaker system last month, which was meant to reduce volatility, had the opposite effect as investors panicked at the prospect of not being able to sell their shares.
For now, shareholders will be looking to Liu to balance the interests of the state with the opening up of the US$5.6 trillion market, while attempting to restore morale among the individual investors who account for more than 80 percent of trading.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure