China's Stock Regulator Said to Defend Post-Rout InterventionBloomberg News
The head of China’s securities regulator defended its intervention in the aftermath of this summer’s stock market collapse, saying it prevented a wider systemic crisis.
China’s leaders showed foresight earlier this year when they began planning how to react to a sharp market plunge after realizing gains were irrational, Xiao Gang, chairman of the China Securities Regulatory Commission, told Communist Party elites in October, according to a person with knowledge of the matter.
Xiao made the remarks at the party’s Fifth Plenum gathering in late October, the person said. More than 350 party elites attended the meeting. The comments are his first to have surfaced after more than $5 trillion in shareholder value was wiped out during the rout. The Shanghai Composite Index had since recovered, gaining about 20 percent from an August low.
Xiao’s remarks were in line with Premier Li Keqiang’s previous assessment of the government’s intervention. China took effective measures after the stock market fluctuations in July and managed to guard against systemic risks, Li told executives of multinational companies at the World Economic Forum in Dalian in September.
Chinese authorities have been clamping down on malpractices in its securities industry following the market turmoil, investigating brokerages and regulatory officials. Yao Gang, one of four vice chairmen at the CSRC, is under investigation for “alleged serious disciplinary violations,” the Communist Party’s discipline committee said in a Nov. 13 statement.
China must strengthen financial regulation and the process of approving initial public offerings, Xiao, a former central bank official and head of the nation’s fourth-largest lender, said at the same meeting.
— With assistance by Aipeng Soo