Former Agricultural Bank of China head, Liu Shiyu, has been named to replace Xiao Gang in the top post at nation’s securities watchdog
The chairman of one of the mainland’s biggest banks has been confirmed as the new head of the securities regulator following his predecessor’s removal from office after he failed to rein in months of massive volatility and turmoil in the nation’s stock markets.
A brief statement by Xinhua yesterday said Liu Shiyu, the head of the Agricultural Bank of China, would take over as head of the China Securities Regulatory Commission.
Liu, 54, a professional banker who has previously worked as a deputy to central bank Governor Zhou Xiaochuan, is expected to face huge pressure to restore confidence in mainland markets.
“The two major challenges facing the new chairman are to bolster investor confidence to stabilise the weak market and to smoothly launch the registration based IPO reform,” said Xu Lei, a strategist at Shenwan Hongyuan Securities. “The job at the CSRC will be difficult given the current situation and it will be some time before Liu’s own ideas about the market surface.”
Zhao Xijun, a professor at Renmin University in Beijing, agreed Liu faces a daunting task.
“On the one hand, he has to steer China’s stock market moving forwards to continue reform and opening up, and on the other hand he has to be extremely careful of risks.”
“The gossip that Xiao Gang would step down has been around for a while and now it’s official,” said Cao Fengqi, a finance professor at Peking University. “Unfortunately, for China’s securities markets, changing an individual may not solve its problems.
“China’s stock market had almost touched the triggering line for systemic risk under Xiao,” said Zuo Xiaolei, a researcher in the Counsellors’ Office at the State Council. “As Xiao was in charge, he has to take responsibility, although Xiao personally did try hard to get things done.”
The ex-head of the regulatory body was widely blamed for failing to forecast the mainland’s stock market crash last summer, when market capital of more than US$ 5 trillion evaporated between mid June and late August last year.
It was, however, the introduction and then swift withdrawal after only four trading days of a circuit-breaker mechanism to halt volatile stock market trading that was probably the straw that broke the camel’s back. Xiao’s days at the regulatory body, with his hair turning visibly grey during his three years in office, were numbered after the fiasco last month.
Liu’s appointment came as a surprise to many as he was tipped earlier to be appointed deputy secretary-general to the State Council.
Confidence in the share markets, prone to government intervention and allegations of insider trading, has been severely shaken. Some retail investors commenting online about his appointment hoped his surname may be auspicious. They said Liu sounds like niu, the Chinese word for bull, with its positive connotations of bull markets and rising share prices. Others cautioned that his arrival could be same as changing the manager of China’s national men’s football team, with little chance of change or success whoever is put in charge.
Additional reporting by Daniel Ren