CSRC, China’s securities watchdog, pledges to prevent ‘abnormal fluctuations’ in embattled stock market

Yi Huiman, chairman of the China Securities Regulatory Commission, stresses the need for ‘bottom-line thinking’
The Hang Seng Index recorded its biggest monthly slump in a year in July

China stock market

Iris Ouyangin Shenzhen

Published: 4:41pm, 1 Aug, 2022

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China’s securities watchdog will work to stabilise the capital markets and prevent “abnormal fluctuations” as a period of high volatility continues, said its chairman.

Yi Huiman, chairman of the China Securities Regulatory Commission, stressed the importance of “bottom-line thinking” in an article published on Monday in Qiushi, the Communist Party’s main journal on political theory.

“It’s a rule that the market has ups and downs, and the government should not intervene in normal fluctuations,” Yi said. “But not to intervene doesn’t mean letting it move in any direction, [we] must always insist on a bottom-line mentality, and firmly avoid abnormal fluctuations triggered by market malfunction.”

His comments came as the country’s stock markets remain in a downward cycle.

The Hang Seng Index fell an 11-week low during trading on Monday, hammered by the increasing risk of Chinese companies being delisted in the US. The benchmark recorded the worst monthly performance in a year in July, with a 7.8 per cent drop.

China’s economy grew by just 0.4 per cent in the second quarter, compared with 4.8 per cent in the first three months.

Investors are concerned about the impact of the zero-Covid policy and geopolitical tensions with the US, dragging down mainland stocks. The Shanghai Composite Index is down 10.5 per cent so far this year, snapping three consecutive yearly gains.

The capital market is the “barometer” of the national economy, reflecting expectations and confidence, Yi said. The stability and healthy development of the capital market is vital given the current “complicated situation”, he said.

Yi’s comments are in line with an earlier pledge by Vice-Premier Liu He to boost the financial markets. In March he vowed support measures to bolster the markets and economic growth.

The CSI 300 Index jumped more than 4 per cent and Hong Kong stocks rallied after he promised the government would make sure any regulation that could have “a significant impact on capital markets” is coordinated with the financial management departments in advance.

The CSRC will work with other regulators to maintain stability and consistency of expectations on policy, help resolve the risks facing property developers – a major drag on the economy – and facilitate the healthy development of the platform economy, Yi said.

The watchdog will also accelerate the implementation of schemes aimed at helping companies seeking overseas listings, he said.