China Stock Rally Extends After Naming Of New Top Regulator
The onshore benchmark CSI 300 Index rose as much as 0.7%, after Beijing announced that Wu Qing will take over as chairman of the China Securities Regulatory Commission.
(Bloomberg) -- A rally in Chinese shares continued Thursday after authorities signaled a stronger resolve to stem a $7 trillion rout via a surprise move to replace the head of the country’s securities regulator.
The onshore benchmark CSI 300 Index rose as much as 0.7%, after Beijing announced that Wu Qing, a banking and regulation veteran, will replace Yi Huiman as chairman of the China Securities Regulatory Commission. Smaller stocks rallied harder, with the CSI 1000 gauge for the sector surging 4.6% at one point.
An index tracking Hong Kong-listed Chinese firms was steady. The mainland stock markets will be shut from Friday for the week-long Lunar New Year holiday, while the Hong Kong bourse will host half-day trading Friday.
READ: Everything China Is Doing to Rescue Its Battered Stock Market
The abrupt appointment of Wu, who earned the reputation as “the broker butcher” when he led a crackdown on traders in the mid-2000s, cemented the impression that authorities are increasingly concerned about the economic and social damage of a struggling stock market. The move added to a drumbeat of rescue measures, from wider trading curbs to a show of support by the nation’s sovereign wealth fund, that have triggered a rebound earlier this week.
The optimism persisted even as data showed that China’s consumer prices fell last month at the fastest pace since the global financial crisis, indicating stubborn deflationary pressures for the world’s second-largest economy. Overseas investors jumped on the bandwagon too, buying 9 billion yuan ($1.3 billion) of mainland stocks via Hong Kong trading links as of 10:18 a.m. local time, on course for an eighth consecutive day of inflow.
“This appointment ends the practice that commercial bankers head the CSRC, as Wu Qing is a veteran securities regulator with experience across regulator and exchanges,” Shujin Chen, an analyst at Jefferies Financial Group, wrote in a note. “But more importantly, this unusual move signals more attention to capital market from President Xi.”
The removal of Yi, who has been in charge of the CSRC since 2019, echoes a move to shift the market chief in 2016 after an earlier epic selloff in stocks. The dismissal of the 59-year-old was a surprise as officials of his rank typically retire at 65.
China’s previous decisions to name new markets chiefs have proved a success in boosting shares. The CSI 300 rose more than 40% in almost a two-year span after Liu Shiyu was assigned to replace Xiao Gang in February 2016. The gauge rose more than 80% over two years after Liu was replaced by Yi five years ago.
Pressure is mounting on Beijing to act more quickly and resolutely to end a market meltdown, which had wiped out $7 trillion from Hong Kong and mainland equities since their 2021 peaks, that poses a growing threat to financial and social stability. It’s also crucial for policymakers to prevent a weak stock market from further damping consumer demand as China enters the Lunar New Year holiday week.
The rescue measures rolled out so far have mostly been piecemeal in nature, including wider trading restrictions on investors including quantitative hedge funds, as well as moves such as guiding brokerages to adjust margin call levels. Earlier efforts included curbs on short-selling as well as state buying of shares in the nation’s largest banks.
(Updates with latest prices and consumer price data)
More stories like this are available on bloomberg.com
©2024 Bloomberg L.P.
