Stream­ing an­a­lysts raise CSRC con­cern

China Daily (Canada) - - LIFE - By LI XIANG lix­i­ang@chi­nadaily.com.cn

Some equity re­search an­a­lysts have be­come cy­bercelebri­ties who con­tro­ver­sially com­mu­ni­cate with in­vestors through live video-stream­ing web­sites and video-shar­ing apps, which has raised the eye­brows of China’s se­cu­ri­ties reg­u­la­tor.

The Shang­hai and Bei­jing of­fices of the China Se­cu­ri­ties Reg­u­la­tory Com­mis­sion have re­port­edly is­sued no­tices to the se­cu­ri­ties firms un­der their reg­u­la­tory ju­ris­dic­tion, ask­ing them to im­prove the in­ter­nal con­trols over the pub­li­ca­tion of their re­search re­ports through on­line plat­forms and instant mes­sag­ing apps.

The reg­u­la­tor’s con­cern came af­ter a young and at­trac­tive fe­male equity an­a­lyst named Liao Lei at Founder Se­cu­ri­ties Co broad­cast her re­search re­port in a tra­di­tional Chi­nese cos­tume through on­line video-shar­ing plat­form Meipai app on April 7.

The core value of sell-side an­a­lysts lies in their abil­ity to help with mar­ket pric­ing.”

The video, although it has al­ready been deleted, be­came a hit soon af­ter it went on­line and at­tracted in­tense pub­lic at­ten­tion.

The eye-catch­ing way of us­ing on­line plat­forms and so­cial me­dia net­works to pub­lish re­ports and com­mu­ni­cate with in­vestors have also been copied by other se­cu­ri­ties firms in­clud­ing Haitong Se­cu­ri­ties Co Ltd with the in­ten­tion of gain­ing greater pub­lic ex­po­sure.

While it is not of­fi­cially banned, the se­cu­ri­ties reg­u­la­tor said in the no­tice that such prac­tices have caught wide pub­lic at­ten­tion and raised ques­tions over the an­a­lysts’ pro­fes­sional ethics and ex­per­tise, ac­cord­ing to me­dia re­ports.

“Com­pe­ti­tion among se­cu­ri­ties firms is in­tense and it is un­der­stand­able that some would take ad­van­tage of pop­u­lar on­line video plat­forms to pro­mote them­selves,” said a se­nior an­a­lyst at a ma­jor bro­ker­age in Bei­jing, on con­di­tion of anonymity.

The an­a­lyst said that his bro­ker­age has yet to re­ceive any in­struc­tion or warn­ing from the reg­u­la­tor, but he ad­mit­ted that there has not been any in­ter­nal reg­u­la­tion when it comes to us­ing on­line video plat­forms and smart­phone apps to pub­lish equity re­search re­ports.

The de­vel­op­ment of new on­line com­mu­ni­ca­tion tools has broad­ened the chan­nels for in­vestors to re­ceive mar­ket anal­y­sis and trad­ing ad­vice.

Some an­a­lysts said that the cy­bercelebrity ef­fect is un­likely to last long as what ul­ti­mately mat­ters for se­cu­ri­ties firms is the qual­ity of their re­ports and their abil­ity of of­fer in­sight­ful trad­ing ideas.

“The core value of sell-side an­a­lysts lies in their abil­ity to help with mar­ket pric­ing. Their value will still be tested by the mar­ket,” Gao Shan­wen, chief econ­o­mist at Essence Se­cu­ri­ties Co, wrote in an ar­ti­cle.

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