China’s stock market immature, says official

Regulatory commission chief says govt will take more counter measures

SHANGHAI: China’s stock market is immature and the government will take more measures to improve supervision following the latest bout of extraordinary volatility, said China Securities Regulatory Commission (CSRC) Head Xiao Gang.

“The abnormal stock market volatility has revealed an immature market, inexperienced investors, an imperfect trading system and inappropriate supervision mechanisms,” Xiao Gang said in an annual meeting.

His remarks were published on the CSRC website.

Xiao said the stock market rout had highlighted the problems facing CSRC’s regulatory mechanisms, adding the authority would learn from this year’s problems and strengthen supervision to avoid risks and promote a healthy and sustainable development in capital markets.

The CSRC instituted a flurry of blunt measures in 2015 including halting short selling and banning share sales by major shareholders in order to stabilise markets after major indexes plunged more than 40% last summer. Indexes had rebounded about 25% late last year from their August lows, but  plunged back into bear market territory in early 2016, alarming investors worldwide.

Xiao warned that fresh falls in global equities, together with increasing global uncertainties, stronger expectations of a weakening yuan and rising debt default risks will bring more regulatory challenges for China’s capital markets.

China will also intensify crackdowns on insider trading and manipulation by funds and curb speculation in equities and futures market.

However, “it will further open up its capital markets to attract more investment and push forward to improve the new third-board system as well as a registration-based system for stock market flotations,” Xiao said.

Published in The Express Tribune, January 17^th, 2016.

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