Markets to face extra scrutiny to curb speculators
Print Edition
CHINA will tighten supervision of stock markets to prevent systematic financial risks, a regulator said yesterday, following a 2015 collapse in share prices and complaints investors are engaged in a dangerous new round of speculative buying.
Regulators need to stop “blind expansion” by financial firms, Deputy Chairman of the China Securities Regulatory Commission Li Chao said at a news conference.
People in financial industries have warned insurance companies and others are making dangerously aggressive investments in stocks and real estate. On Friday, the chairman of a life insurer was banned from the industry for violating limits on investing.
Regulators needed to “increase the intensity of supervision” and “seriously deal with illegal acts,” said Li, adding that stock markets fluctuations in 2015 were a painful lesson for regulators.
In 2015, share prices surged and then collapsed, wiping trillions of dollars off stock value and battering small investors.
That was a “hard lesson” that regulators need to improve their ability to keep track of what brokers and investors were doing, Li said.
Regulators plan this year to “fully implement compliance and risk control” and “standardize the investment banking business,” he said.
Markets have stabilized since the crash, allowing companies to resume raising money in stock offerings, said CSRC Chairman Liu Shiyu.
Liu said 248 companies raised 163 billion yuan (US$24 billion) last year.
Regulators imposed more than 200 administrative measures last year against securities firms, fund managers and others who were found to be acting improperly, Li said.
On Friday, the country’s insurance regulator said the chairman of Foresea Life Insurance Co was banned from the industry for 10 years. The regulator said Foresea risked too much of its assets on investments in stocks and real estate.
In December, another insurer, Evergrande Life, a unit of China Evergrande Group, was banned from the stock market. Regulators said it had engaged in frequent speculative trading and ordered it to improve risk management.
China’s stock market is one of the world’s biggest but prices are volatile and complaints of insider trading and other abuses are common.
The markets are largely sealed off from global capital flows but China is gradually easing barriers to foreign investors owning Chinese stocks.
China will gradually raise the upper limit of overseas investors’ stock proportions in domestic securities and futures companies, Fang Xinghai, CSRC deputy head, told the press conference.
The move’s purpose is to push for better development of the domestic securities and futures market, Fang said .
The CSRC will continue to promote reciprocal bilateral investment treaties under the framework of bilateral or multilateral agreements, he added.
China launched the Shanghai-Hong Kong Stock Connect in late 2014 to let investors on the mainland and Hong Kong trade selected stocks on each other’s exchanges, subject to daily and aggregate quotas.
A similar link between Shenzhen and Hong Kong was launched in December.
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