'The next task [for the China Securities Regulatory Commission (CSRC)] is to fully support the stable operation of the market [...] reasonably balance supply and demand, pace fund-raising activities in an orderly way, including issuing regular reports on previously locked-up shares, and encourage long-term funds to invest,' [CSRC chairman Shang Fulin] was quoted as saying [...]
The CSRC would adopt measures to deal severely with those who engaged in illegal activities such as spreading malicious rumours, he said.
The Post, June 23
Laudable objectives, all of them, but since when have they comprised the task of a regulator, and just how godlike does the CSRC think it is in knowing exactly how to fine-tune the workings of a market? Let's take them one by one:
'To fully support the stable operation of the market ...' - Wonderful, but what does Mr Shang consider to be a market in stable operation and how would he support this?
In my view, a market is always in as stable a position as it can be. It reacts fully and in precise measure to all known influences on it. If the dominant influence happens to be sudden bad news then the market will crash and, if sudden good news, it will rally. In both cases this is as stable as the circumstances permit.
The best way of ensuring that no news is so sudden as to cause sudden movement is to place no obstruction on the flow of information in the society in which this market operates; and to discourage government from needless market-related initiatives (these invariably fall in the sudden-news category). Talk to your bosses in Beijing, Mr Shang.
