Chinese stock market regulator steps up war on speculators
The CSRC and the Shanghai exchange pledge to increase supervision of newly-listed stocks and ‘Xiongan concept’ shares
The Chinese stock market regulator has escalated its war on speculators, pledging to increase “real-time” supervision of trading in newly listed and so-called ‘Xiongan concept’ shares.
Speaking at a meeting of members of the Shenzhen Stock Exchange over the weekend, China Securities Regulatory Commission (CSRC) chairman Liu Shiyu reiterated that bourses have the power and the responsibility to conduct real-time oversight and restrict abnormal trading.
The CSRC and the Shanghai exchange say they will particularly focus their attention on preventing speculation in newly-listed small-cap firms and Xiongan concept stocks – those seen as likely to benefit from the development of the planned special economic zone in Hebei province.
In the long run, it will encourage the formation of value investing and fundamental research
The Shanghai exchange warned that it will ask companies to accurately explain the impact the Xiongan New Area will have on their business, and order them to suspend trading should they detect over-speculation.
Since Liu took office early last year, policy makers have been beefing up efforts to curb malpractice and volatility in a market known for its roller-coaster swings. A lack of effective oversight and rampant speculation are seen as being among the main causes of the stock-market mayhem that erased about US$5 trillion off the value of shares in 2015, and directly led to the resignation of Liu’s predecessor.
The benchmark Shanghai Composite Index is still down 38 per cent from its high in 2015.
“It certainly has a negative impact on the market in the short term,” said Zhang Haidong, chief investment officer at Shanghai Jinkuang Investment, referring to the regulatory crackdown. “But in the long run, it will encourage the formation of value investing and fundamental research.”
