New | Beijing’s crackdown on brokerages designed to shake up China’s power-money structure, say analysts

Beijing is trying to rid mainland stock markets of collusion between power and money by stepping up investigations of securities companies, analysts said, while warning of shocks to markets that had just stabilised.

Three of China’s top 10 brokerage companies by assets – Citic Securities, Guosen Securities and Haitong Securities – reported late this week that they were being investigated by the China Securities Regulatory Commission (CSRC), all suspected for having breached the mainland securities regulations.

At a press briefing on Friday the CSRC did not detail the matters being looked into, but analysts said the crackdown indicated Beijing was intent on shaking up China’s political/economic structure.

“Clearly [Communist Party general secretary] Xi Jinping is trying to change a rather long-held culture where those who obtain powerful positions believe that the rules don’t apply to them, and that clearly is changing and he has changed behaviour,” said Professor Paul Gillis, from Peking University’s Guanghua School of Management.

“Its my sense this started out as a search for the guilty to blame someone for the major market correction. But I think it has morphed into an effort to clean up the industry and to try to take market manipulating practices out of the markets so the markets can operate more fairly, and in that way I would link it back to the anti-corruption campaign.”