CHINA’S new stock regulator Saturday vowed to step in “decisively” if needed to stem the sort of stock market panic that resulted in a US$5 trillion wipeout last summer, adding that it was far too early to think about the State rescue fund leaving the market.

    China Securities Regulatory Commission Chairman Liu Shiyu defended the government’s decision to intervene last year, saying the move bought leaders time to restore a “dysfunctional” market and headed off bigger threats to the financial system.

    “Under such a situation of panic, if we didn’t act decisively, could the impact not be huge?” Liu said. “It would certainly have led to even greater panic and systemic financial risks.”

    Liu was responding to questions at his first briefing since replacing Xiao Gang, who was widely criticized for his handling of last summer’s rout, which saw the Shanghai and Shenzhen stock markets slump as much as 40 percent in just a few months, and oversaw the failed introduction of a market circuit breaker mechanism in January.

    Liu said China will not reintroduce the circuit breaker mechanism to its stock markets in the next few years.

    The circuit breaker mechanism was dismantled after only a few days. The mechanism was blamed by investors for worsening a sharp selloff in Chinese stocks.

    He said plans to shift to a registration system for initial public offerings (IPOs) of stocks would take time, requiring research and feasibility studies, technical preparations and new rules.

    The CSRC has been discussing transformation of its current approval-based system — seen as distorting the IPO market and encouraging official corruption — to a system that would let the market decide who can list and for how much, since 2014.

    Liu’s remarks signaled the market won’t be flooded with new shares or any of the stakes that China Securities Finance, the State rescue fund, snapped up to stem the rout.

    Liu said it was too early to talk about China Securities Finance exiting the market. Last August, the CSRC said the fund will remain in the market for years to come. The fund now has stakes in 600 listed firms. (SD-Agencies)