China’s $5 trillion stock market rout, now in its eighth month, has claimed its highest profile victim yet, with Xiao Gang, the head of the nation’s security regulator, leaving his post.
Chinese state-run media reported over the weekend that Xiao, the China Securities Regulatory Commission, has been replaced following a period of unprecedented market volatility.
Xiao is the biggest casualty of the seven-month, 45% plunge in the nation’s stock market.
Here’s the two-line statement from the Xinhua news agency.
Liu Shiyu was appointed as Party leader and chairman of the China Securities Regulatory Commission(CSRC), according to decisions made by the Communist Party of China Central Committee and the State Council on Saturday.
Xiao Gang, former head of the CSRC, was removed from his post as the chairman as well as the Party leader of the commission.
Under Xiao’s watch Chinese stocks went on a roller coaster ride from mid-2014, rallying by more than 150% in less than 12-months before tanking in spectacular fashion from mid-June last year.
The rapid and at times unconventional methods used to address the 50% market slide, including arresting short sellers who were deemed to be “malicious”, weakened Xiao’s grip on the high powered, high profile position.
The embarrassing implementation of market circuit breakers earlier this year, scrapped after just four days of use following a 857 second rout on January 7, now appears to have been the final straw, making Xiao’s position at the regulator untenable.
Liu Shiyu, Xiao’s replacement, was the former chairman of the Agricultural Bank of China, the nation’s third-largest lender by market capitalisation. Before joining the bank, he previously held the position of deputy governor at China’s central bank, the People’s Bank of China.
He has the credentials, but whether it will be enough to steady the market – particularly at a time when valuations remain elevated – is yet to be determined.