CHINA’S new securities regulator Liu Shiyu has a tough job on his hands — not least managing a huge weight of expectation from millions of small investors smarting from a recent stock market collapse.

    Liu, appointed over the weekend to replace Xiao Gang, inherits the fallout from near 50 percent drops in China’s major indices from peaks in June, blamed on a confluence of mistakes made by multiple regulators.

    While Liu has no experience in the securities business and his curriculum vitae reads much like Xiao’s — and other previous heads of the China Securities Regulatory Commission (CSRC) for that matter — some superstitious netizens are pinning their faith on his birth sign.

    They note he was born under the Chinese zodiac sign of the Bull, and have made word plays rhyming his family name, which sounds like the Chinese word for ox.

    “The chairman’s sign is the Bull. How could the A-share market not become bullish?” Li Daxiao, chief economist of Yingda Securities, wrote.

    On Monday, the first day’s trading since his appointment, the blue-chip CSI300 index rose to its highest in almost a month.

    A Chinese microblog forum was flooded with pictures of people holding up their stock market wish-lists for Liu — from the technical, such as reviving the index futures market, to the direct: “Surpass 6,124,” demanded one woman, referring to the record high the Shanghai Composite Index struck in 2007.

    “Let me make a load of money so I can find a good wife,” urged another poster.

    Few analysts, however, expect much radical reform from Liu in the near term, nor does his appointment necessarily signal a dramatic change in approach from the government.

    Liu has to walk the same policy tightrope on which Xiao tripped and fell, according to investors, who blame a series of policy missteps for overheating a market rally and aggravating the ensuing crash.

    “It’s irrational to expect that changing the chairman would have an impact on the market,” said Chen Long, analyst at Gavekal Dragonomics in Beijing.

    “People always believe new officials are like a new broom,” said Zhao Yayun, senior researcher at the Chongyang Institute for Financial Studies in Beijing. “To restore confidence, he [Liu] needs to roll out some exciting reform measures.”

    On his “To Do” list, Liu has to restart a stalled reform process, with commitments to liberalize rules on initial public offerings and revive derivatives markets to improve investors’ ability to hedge against downside risks, investors say.

    Such hedging was set in reverse during the 2015 crash in the name of pursuing what the government referred to as malicious short-sellers.

    Potentially the toughest job for Liu, known in banking circles for his quiet demeanor, will be to repair damaged trust between the CSRC and investors, both institutional and individual, analysts said.

    They estimate retail investors account for about 80 percent of daily trades and say many were caught out when they invested at the tail-end of the rally early last year only to see the market slump shortly afterwards.

    “Boosting investor confidence requires co-ordinated efforts [with other State agencies] rather than the CSRC alone,” said Zhao at the Chongyang Institute. Chinese stock market sentiment is shaped by various factors, in particular the level of money supply and shifts in policy support for various industries.

    There have been signals that the government is building the foundations for a “super regulator” to oversee the CSRC, the insurance and banking sectors and the People’s Bank of China, so Liu may see his position have less influence over time. (SD-Agencies)