China Stocks Plunge Into Bear Market | Latest (8/24): "Black Monday"

[Scientific Playa]

Business Day
China Graft Agency Investigates Stock Regulator
By THE ASSOCIATED PRESS SEPT. 17, 2015, 6:42 A.M. E.D.T.

BEIJING — China's main anti-corruption agency is investigating the deputy head of the country's securities market regulator following the collapse of a stock price boom.

Zhang Yujun, deputy chairman of the China Securities Regulatory Commission, is suspected of "severe violations of discipline," according to the Communist Party's Central Commission for Discipline Inspection. The one-sentence announcement late Wednesday gave no details but that term usually refers to corruption.

Chinese authorities have launched investigations of brokerages, government employees and a reporter for a prominent business magazine following the collapse in prices that began in early June. Those moves suggested the ruling party might be trying to deflect blame for the decline, which prompted a multibillion-dollar government intervention.

On Tuesday, the police ministry announced executives of China's biggest stock brokerage, state-owned Citic Securities Ltd., were suspected of insider trading and leaking sensitive information. They include the firm's general manager Cheng Boming, chief operating officer Yu Xinli and deputy manager of its information technology center, Wang Jinling.

In August, the official Xinhua News Agency said eight Citic employees and one current and one former employee of the market regulator were suspected of illegal stock trading.

The police ministry announced July 12 it suspected securities firms of "illegally manipulating securities and futures exchanges."

The market benchmark soared more than 150 percent beginning late last year before hitting a peak June 12 and plunging.

The downturn triggered complaints politically favored insiders profited at the expense of small investors. Beijing responded by barring large shareholders from selling and ordering executives to buy back any recently sold stock in their own companies.

 

[Domingo Halliburton]

China's Top Stock Regulator Gives Up On "Immature" Market, Hands In Resgination

Reuters reported on Monday, citing unnamed sources close to the Party.

“The (Communist Party) central (leadership) is extremely unhappy with Xiao Gang. It is certain he will change jobs," one source said.

"Xiao Gang handed in his resignation last week," a “financial industry source” confirmed.

Xiao’s term as chairman doesn’t technically end until 2018, but we can’t exactly blame him for wanting to duck out early. As noted above, the CSRC’s efforts to keep the equity dream alive for the hordes of everyday Chinese who plowed their life savings into the market have been nothing short of unprecedented and at times bordered on the comically absurd. At one point for instance, the regulator simply halted trading in 75% of listed shares indefinitely. In another now famous boondoggle, Beijing arrested a journalist for printing a story that moved futures in the “wrong” direction.

It seems likely that Xiao has run out of ideas. It’s also possible that he fears for his freedom. After all, CSRC officials were among those arrested last year. Indeed, vice chairman Yao Gang came under investigation for graft shortly after a series of brutal selloffs in China rocked global markets in late August.

While Reuters says there are three candidates short-listed to replace Xiao, it’s not clear that i) anyone wants the job, or ii) that the Party will be willing to suffer further reputational damage by admitting that the country’s top securities regulator has effectively given up on the market.


So essentially, the Politburo would probably like nothing more than to have Xiao's head delivered on a silver platter (figuratively speaking we hope), but the optics around his exit would likely mean even more selling by the country's millions of semi-literate, newly-minted, over leveraged daytraders who would see the CSRC chief's ouster as still more proof of that the Chinese stock market is, in the words of one 48-year-old bank accountant from Kunshan, "a mess."

The CSRC said rumors of Xiao's resignation are unfounded.

"This information does not conform to the facts," the agency said, in a characteristically hilarious statement.

We shall see. In the meantime, anyone who's interested in trying their hand at corralling the most unruly equity market on the planet is encouraged to update their CV and send it to Xi. But be forewarned, this is one job where failure could land you in a Chinese prison for the rest of your days.

 

[88m3]

 

[Dr. Sebi Jr.]

They're just doing this because Cosby tried to buy NBC.