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CHINA’S stock market is immature and the government will take more measures to improve supervision following the latest bout of extraordinary volatility, the head of China Securities Regulatory Commission (CSRC) said Saturday.
“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.
Xiao said the stock market rout has highlighted the problems facing CSRC’s regulatory mechanisms, adding the authority will learn from last and this year’s problems and strengthen supervision to avoid risks and promote healthy and sustainable development in capital markets.
His comments came after fresh losses last week on the Shanghai and Shenzhen markets, which had already shed around 40 percent of their value over several weeks last summer despite government efforts to prop them up, including massive share purchases and attempts to restrain panic buying.
Several brokerages are under investigation, notably on suspicion of insider trading.
Xiao said “deep lessons” had to be learned from the recent turmoil, with a push to “intensify reforms, reinforce supervision and support the development of healthy capital markets” by opening them up.
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.
The securities regulator said it will improve supervision in margin trading and program trading to seek stability in the stock market and step up supervision of account ownership.
China will also intensify crackdowns on insider trading and manipulation by funds and curb speculation in equities and futures market, Xiao said.
The Shanghai-Hong Kong stock link will be improved, a Shenzhen-Hong Kong connect will be started and a link between the Shanghai and London bourses will be looked into, Xiao said. (SD-Agencies)
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