On the back of tighter financial market supervision, there has been increasing dissatisfaction within the domestic market. This is particularly following the sustained decline of the stock market over the preceding period, presenting China Securities Regulatory Commission's Chairman, Liu Shiyu with a difficult situation.
Looking from a third party's perspective at the current situation faced by the Securities Regulatory Commission, Anbound's chief researcher Chan Kung sees the following reasons as the factors leading to the current state:
Firstly, the stock market exchange is a profit exchange with little relations to the ordinary people. On the contrary, it has strong relations with various profit blocs. If we were to reconfigure the respective interests of each party within this profit exchange, there would be many opinions and they will use various public opinion tools, especially the words of the ordinary people who can't beat the gossip. This will add to the pressure of the Securities Regulatory Commission, or to put it plainly, raise the whole "I will bring you down, and if I don't bring you down, I will tarnish you" sentiments.
Second is the number of accumulated of problems facing the Securities Regulatory Commission. We all know the "three feet frozen ice" principle. With the myriads of unattended supervisory issues, there will be tremendous pressure for the current Chairman, Liu Shuyu if all these issues were to be passed on to him at one go. On the one hand, it would be difficult to justify if these issues are not resolved. On the other, there will be numerous people who will be offended should these issues be resolved. This is the second pressure facing the China Securities Regulatory Commission.
Thirdly, the regulatory department is facing many complicated problems, having messed up in several aspects. Having stood well initially, it now finds its hands and feet and a little tangled up. For instance, in dealing with market volatility. On the back of market pressure, several officials of the commission had engagements with certain well-known analysts, even interfering, leading these analysts to jump around, attracting attention. How many academicians and researchers would have been offended by this? Initially, everyone was willing to talk; now they aren't. In this respect, these officials are lack of consideration or in other words, did not take good care of its position.
Fourth is the practices from the preceding period. When the stock indices declined, several parties retaliated and pushed down the market to see what the commission would do. Would the commission still be determined in resolving the stock index problems? Or would the commission still be adamant on proceeding with its supervision initiatives? This sort of retaliation is similar to those in CITIC Securities who take advantage of the situation to make quick gains.
Firth is the fundamental problems of the market. Looking at the preceding period's economic and Renminbi exchange rate performance, there is bound to effect on the financial markets. This is a fundamental issue. Even if nothing is done, there is still a possibility of the market tumbling. Now that the leading cause can't be determined, everyone is just frantically screaming.
This is the predicament facing Chairman Liu Shiyu. If you want to understand the stock market, you will first need to understand these issues. Now, how do we solve these problems?
Many see these problems as a result of poor policy transparency. This sort of statement is a measure to reserve political correctness. In reality, this policy transparency issue is an operational policy issue, a flaw within the operational aspects of these policies. China's policies tend to be on the extremes. On one end, it could be the extreme end of relaxation; on the other, it could be the extreme end of restrictions. This has led to the "chaos upon relaxation, death upon restrictions" situation. If the market is unable to predict your actions, it could easily lead to the creation of battles, battles between the market and the regulators, battles between the market and the policy. Originally, policymakers are supposed to uphold their duty towards the market and the economy. However, it has now turned into a battlefield of survival of the fittest, creating unfavorable conditions for the market. Actually, this situation is not unique to the securities market. It permeates through many aspects of China and its directions. Chan Kung is of the opinion that this is a grave problem, a reflection of issues with the administration of the government. This is a systematic problem where the government has not received adequate buy-in, even after spending a lot of efforts. The outcome has received little support, with no applause from ordinary people. What should be done about this?
I have stated earlier that in any aspect of social development, the process of restructuring is inseparable from the process of organizational system reconstruction. Therefore, the commission should avoid presenting a one-man show. Instead, it should fully utilize the likes of social organizations, associations, academic organizations, local organizations, business associations, and investment organizations to promote the implementation of its policies. The outcome would be way better. If no one is willing to cooperate now, there will only be two possibilities. One is to do the wrong thing, and the other is to restructure these organizations, in order for the policies to be better utilized.
There is another pertinent matter. In order to avoid heading to the extreme ends of doing things, there should be a roadmap. Restructuring of the financial industry is one matter, realignment is another matter, but to what extent are we prepared to head to? On what kind of path? This should be clarified with the market and society and it should be reliable. In the past, Premier Zhu Rongji spoke widely in public lectures and gave situation updates. This is because, for government policies to receive public support, there should be a roadmap. If no one is clear of the direction you are heading to, the outcome is unpredictable. Governing one or another party will only lead to more noise, as well as chaos in the market, impacting the development of the market.
Therefore, in terms of practices, firstly there should be the development of the society that is more extensively reliable. In the past, a lot of money has been spent and it has been realized. Next is the development of a roadmap and how it should be done. This is the task that the commission will have to do in its efforts to restructure the market and preserve market order. These are more important than the market index. Basically, as long as you head forward in faith, head forward towards in dreams and tell a clear "story", there will be the people that are willing to invest. How could it be people do not see the big platter of China? There must be something that is not being done right. Hence I believe, there are issues with the operational aspects of the policies.
If we can cooperate in an objective manner, there is still hope for the future of China's financial market. The world is currently in a mess, the gun sound of Europe has swept across entire Europe and the United States. Taking a look at the world now, is there a place that one can still safely put your money in except China. However, this requires our spirit to struggle. We should not be self-defeating. This will only lead to a messy situation. Therefore, we need to seize the opportunities presented to China by the current global trends. As long we struggle and fight on a stable foot, it will surely become something big. This is the gift from the global geopolitics.
Final analysis conclusion:
Therefore, in the end, it all boils down to the word "stable". This is consistent with China's "steady faction" view. As long as China is stable, avoid indecisiveness while stably handling matters, there is guaranteed success. The phrase "step-by-step to battle" is in fact "step-by-step to victory".
