China Removes Boss of Stock Market

China dismissed its top regulator of the stock market following a number of policy missteps, which contributed to a huge stock selloff.

Xiao Gang was removed as the China Securities Regulatory Commission chairman reported state run news agency Xinhua on Sunday.

Replacing Xiao was Liu Shiyu, who had been the head of the Agricultural Bank of China, which is a huge bank the Chinese government owns.

China’s Shanghai Composite has lost 19% in 2016 after a circuit breaker device was implemented by the CSRC to attempt to protect the small investors from the big swings in the market.

Instead of giving protection, it has created a form of panic selling and needed to be removed.

The Shenzhen Composite, which is smaller and features a number of tech stocks in China, has dropped 20% during the first month and a half of 2016. Since June, a whiplash scenario has hit investors in China.

After soaring to record highs during the first six months of 2015, the bubble popped in China’s stock market in a massive explosion

The Shanghai Composite, the country’s benchmark, crashed and wiped out close to one third of its overall value in under a period of one month.

Authorities then introduced the draconian measures in an attempt to stop losses including the banning of large shareholders from selling and outlawing certain types of short selling while chasing down people they said had manipulated the markets.

The CSRC has played a big role in the effort to rescue the markets, which it appears has been for the most part futile.

The departure of Xiao comes after he gave a frank assessment of the boom and bust China equity market.

Xiao said that the volatility had shown a trading system that was incomplete, an imperfect market system, and regulatory system that was un-adapted.

He added that it exposed loopholes, ineffectiveness from supervision and maladjustments form the CSRC.

That was a self-criticism that was usually forceful. Publishing the words of Xiao suggested the leadership in the country was not pleased with the unfolding of events during the past summer.

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