OPINION> Commentary
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OPINION> Commentary
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Fight irregularities
(China Daily)
Updated: 2008-06-25 07:20 The securities regulator's confidence-building talk may help stabilize the domestic stock market for a while. But it is far from enough to ensure that the market will become stable and healthy after the recent jitters. Shang Fulin, chairman of the China Securities Regulatory Commission (CSRC), said on Sunday that the commission will mete out severe punishment for those who spread rumors that disrupt the market order. At a time when the benchmark Shanghai Composite Index has slid to 16-month lows and is about 55 percent below last October's record high, such a tough talk ostensibly aims at boosting investors' confidence.
However, to crack down on false information and rumors spread to manipulate stock prices is just one of the duties the securities watchdog must fulfill, no matter what the market sentiment is. More important, the current plunge of Chinese shares is clearly not a result of too much bearish gossip. Shooting the messengers simply does not help address the real causes that keep undermining investors' confidence. China's tightening monetary policy, a needed response to soaring domestic consumer inflation, stands out as one of the most obvious driving forces behind the current steep decline of Chinese stocks for it could cut corporate profits. Admittedly, this factor is beyond the securities regulator's control. Yet, the market watchdog is fully capable of addressing another concern about the market's ability to absorb fresh supplies of shares. Domestic investors have long worried about that the equities supply would overwhelm demand. Belatedly, the securities authorities vowed that they will work to create reasonable balance between supply and demand in the stock market by adjusting the timing of fund-raising activities. Worse than an oversupply of equities are rampant market irregularities that seriously erode the fundamentals for the long-term development of China's stock market. It has been reported recently that a former vice-chairman of the stock watchdog was now being investigated for alleged corruption and misconduct in connection with the securities market. Such violations of securities regulations by senior officials will hurt the capital markets more seriously than any rumor can do. The CSRC should first put its own house in order and then fight an all-out war against various market irregularities. (China Daily 06/25/2008 page8) |
