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The Man Tasked With Stopping China’s Stock Selloff
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China's handling of the surging stock market, and use of the market for debt ridden companies to reduce debt loads, is based on an erroneous assumption of how equity markets work. China's lack of experience with declining equity markets during China's experiment with its form of capitalism since 1990, is a serious handicap in 2015.
Xiao Wang, chairman, China Securities Regulatory Commission, March 2013 -
07/08/2015
Wang is former head of the Bank of China, one of four large state owned banks. A WSJ report shows that under Wang as CEO of the bank in 2009 it was the least profitable and the most likely to ramp up lending at the government's request. As a savy politician he was appointed to the Party Central Committee in 2012 and to the position at the regulatory body in March 2013. In efforts to meet party directions Wang has moved in conflicting directions, clamping down on margin financing and as the market selloff worsened even loosened restrictions for loans on homes to invest in the market. The huge surge in the market and the Shanghai and Shenzen stock exchanges is now followed by a selloff in July 2015, which the government has no experince in handling following China's experiment with its own state oriented form of capitalism since 1990. The government plans to allow state owned enterprises with large debt to reduce the debt by investing in a surging market may be based on an erroneous assumption on how equity markets work. Lack of prior experience with equity markets on the downside is another handicap in China.
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Linked Articles
U.S. stocks rebound after punishing day, but China’s market slides again - The Washington Post
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