China regulator has no plans to sell shares bought last summer

China Securities Regulatory Commission's head, Liu Shiyu, has said that it is too early for the government to exit from stock market investments made as part of its efforts to calm markets last summer. China Securities Finance Corp (CSFC) intervened last summer to help stabilise the market, though it became a new concern for investors as they worried the CSFC would soon exit and put large downward pressure on stock prices. The Chairman of the China Banking Regulatory Commission, Stang Fulin added that risks within the Chinese banking sector are controllable. 

Investing.com -

Investing.com - China's new stock market regulator head Liu Shiyu said on Saturday it is too early for the government to exit from stock market investments made as part of its efforts to calm markets last summer.

"As for the exit of China Securities Finance Corp (CSFC), frankly speaking, I haven't thought about it. And in a considerable long time, it's still too early to discuss the exit of CSFC," said Liu, who was appointed chairman of China Securities Regulatory Commission in February after his predecessor Xiao Gang was fired.

CSFC intervention last summer helped to stabilize the market, though it became a new concern for investors as they worried that the CSFC would soon exit and put large downward pressure on stock prices.

Liu also commented on the suspension of the circuit breaker system in the stock market, which led to Xiao's removal. Liu admitted that the system is not appropriate for the Chinese stock market as it is mainly dominated by individual investors.

"It is unlikely in the next few years that there will be a fundamental shift in the investor structure of our capital market. So we don't have the basic conditions to introduce the circuit breaker system," said Liu.

At the same press conference, Shang Fulin, chairman of the China Banking Regulatory Commission, said risks within the Chinese banking sector are controllable.

Shang noted that Chinese commercial banks' capital adequacy ratio rose to 13.45% at the end of last year and the loan loss provision ratio was 181%, which is ample, he said, adding that some international rating agencies are misguided in downgrading China's sovereign and bank ratings.

"In general, risks in the Chinese banking sector are controllable. We need to step up risk controls and our bottom line is that regional and systemic risks are forestalled," Shang said.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.