China has removed Yi Huiman, the head of its securities regulator, as part of its efforts to stabilise the country’s stock markets amid a significant decline in investor confidence.
China moves to revive its stock markets, sacks securities regulator
The Communist Party’s central committee appointed Wu Qing as Yi’s replacement, with Yi being seen by some as the fall guy for recent losses.
Wu, nicknamed “Broker Butcher,” is a senior official known for cracking down on brokerages. A veteran regulator with a reputation for tough actions, he previously served as the acting vice mayor of Shanghai and chaired the Shanghai Stock Exchange.
China‘s stock markets have been impacted by a crisis in the property sector, leading to deflationary pressures and divestments by institutional investors. Last month marked the sixth consecutive month of exchange outflows as foreign investors scrambled for the exits.
Panicked retail investors also offloaded their investments, driving the country’s stock market to five-year lows.
Recent policy announcements by the China Securities Regulatory Commission (CSRC) include a “zero-tolerance” policy against malicious short selling. These measures are aimed at stabilising and revitalising the stock market.
Analysts are already turning bullish on Chinese stocks. Marko Papic, partner and chief strategist at Clocktower Group, commented:
We may have seen a bottom in investor sentiment“ and a “10% to 15% rally in Chinese equities is likely in coming trading days. Tactical plays to bottom fish this may make sense.
A further intervention to curb falls in the price of stocks has seen Beijing using its “national team” of state-owned financial institutions to purchase shares.
The CSI 300 index, which tracks major stocks in Shanghai and Shenzhen, has notched up a 4% increase this month following this intervention.
