China's new securities chief wins good rating

Mr Liu's performance was rated better than that of his predecessor by market watchers, who said his comments will stabilise expectations and ease worries about financing pressure.
Mr Liu's performance was rated better than that of his predecessor by market watchers, who said his comments will stabilise expectations and ease worries about financing pressure. PHOTO: EUROPEAN PRESSPHOTO AGENCY

But investors and analysts say he still has to fix the key issues behind volatility of stocks

BEIJING • The new head of China's securities regulatory body was better than his predecessor at soothing markets, but he still has to show whether he can tackle fundamental problems that make Chinese shares so volatile, investors and analysts have said.

In his debut briefing as chairman of the China Securities Regulatory Commission, Mr Liu Shiyu was cautious in his remarks, which came with a heavy dose of statistics and a touch of humour but were aimed at calming nervous Chinese retail investors traumatised by the market meltdown earlier this year.

The 54-year-old former banker pledged to continue to support the market with share purchases when necessary and vowed not to resurrect the circuit-breaker system that was blamed for worsening share plunges in January.

"The impact of the slumping stock index on the financial market at the time was like an oil-tanker truck whose engine was not working as it went down a steep road," Mr Liu said at the briefing, held last Saturday on the sidelines of China's annual legislative session.

"In a less-severe scenario, the truck might be destroyed and the driver might die. In the worst case, it could lead to forest fire and threaten innocent lives."

Chinese stocks yesterday headed for their biggest gain in more than a week after Mr Liu signalled that he will keep propping up the equity market. The Shanghai Composite Index advanced 2.6 per cent.

Mr Liu's performance was rated better than that of his predecessor Xiao Gang by market watchers, who said his comments will stabilise expectations and ease worries about financing pressure, although investor confidence has yet to recover from last year's stock-market rout.

"Mr Liu's speech will help stabilise the mood in the short term," said Guoyuan Securities analyst Simon Wang. "Compared with his predecessor, he seems to have a better understanding of the Chinese reality of a retail-investor-dominated market structure," Mr Wang was quoted by The Wall Street Journal as saying.

Mr Liu took over as head of the securities regulatory body last month from Mr Xiao Gang, who was widely criticised for his handling of last summer's rout and oversaw the failed introduction of a market circuit-breaker mechanism.

Mr Liu is a former chairman of the Agricultural Bank of China.

When quizzed about China's shift towards a registration system for initial public offerings , Mr Liu said the system is an important task for the healthy development of the capital market. "I can clearly answer you that this has to be done. The question is about how to do it and how to implement it."

Mr Chu Ming Chuan, a member of the Chinese People's Political Consultative Conference and chairman of Asia Cassava Resources Holdings, told Bloomberg: "We have high expectations for the new chairman.

"We hope the new chairman can fix the situation of volatile stocks that has hurt investor confidence. China's stock market needs to be developed but it has to be done in a prudent manner."

A version of this article appeared in the print edition of The Straits Times on March 15, 2016, with the headline 'China's new securities chief wins good rating'. Print Edition | Subscribe