China’s market rout claims its first victim
CHINA’S embattled top securities regulator Xiao Gang had offered to resign, sources said yesterday, after perceived mismanagement had wiped more than $5 trillion (R84 trillion) off the capitalisation of the Shanghai and Shenzhen stock markets since they peaked last June.
The 57-year-old chairman of the China Securities Regulatory Commission (CSRC) tendered his resignation last week after his brainchild, a “circuit-breaker” mechanism to limit stock market losses, was blamed for exacerbating a sharp sell-off, a source with ties to the leadership and a financial industry source said.
The “circuit breaker” was deactivated on January 7, just three days after its introduction. “The (Communist Party) central (leadership) is unhappy with Xiao Gang. It is certain he will change jobs,” the source close to the leadership said, adding that it was unclear where he would go next. Both sources requested anonymity because they were not authorised to speak to the media.
Market volatility
It is unclear whether Xiao’s resignation offer has been accepted by the central government. The CSRC was not available for comment.
On Saturday, Xiao gave a speech at an annual meeting in which he said the stock market rout had highlighted the problems facing the CSRC’s regulatory mechanisms.
“The abnormal stock market volatility has revealed an immature market, inexperienced investors, an imperfect trading system and inappropriate supervision mechanisms,” he said.
Xiao’s term does not formally expire until end-2018.
The party’s Organisation Department has short-listed three candidates to succeed Xiao. Xiang Junbo who is chairman of the China Insurance Regulatory Commission, is the leading candidate.
“The Organisation Depart- ment has sounded out all three candidates and completed background checks,” said the source with leadership ties.
The state’s campaign to restore confidence in the stock markets has been dented by entrenched market pessimism, with the Shanghai composite index falling through the lows seen during the depths of last year’s crash. – Reuters