Source : 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.
