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Financial regulation
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China’s securities regulator lays out his bottom line for corporate governance to undergird markets for external shocks

  • The Shanghai index tumbled last week as trade war escalated
  • Analysts are concerned about a heavier decline if the US extends tariffs to US$325 billion of Chinese goods

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A stock brokerage of Nanjing Securities in Jiangsu’s provincial capital of Nanjing on January 21, 2019. Photo: Reuters
Laura He

China’s securities regulator has reiterated his resolve to crack down on malfeasance, outlining four types of corporate activities that breach the bottom line of good governance, as the country’s stock market reeled from a week of roller-coaster swings.

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“Corporate governance forms the pillar and the foundation of the capital market, without which a solid financial system cannot exist,” said the chairman of the China Securities Regulatory Commission (CSRC) Chairman Yi Huiman, during an event by the Association of public companies in Beijing. “Listed companies and major shareholders must strictly abide by four best practices of good corporate behaviour: no false information disclosure, no insider trading, no manipulation of stock prices, and nothing that harms the interest of listed companies.”

Yi’s comments follows last week’s slump in the stock indexes of Shanghai and Shenzhen, which wiped out more than US$1 trillion of capitalisation in the two markets. While the fluctuations were due to what Yi called “external factors” caused by the impasse of the US-China trade war, the long term health of the capital market depends on sound management and corporate governance, he said.
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“The key point is corporate governance, including information disclosure and internal control,” Yi said, adding that the regulator will tighten the rules governing listed companies to improve the quality of listed companies.

The chairman of the China Securities Regulatory Commission (CSRC) Yi Huiman during a press conference in Beijing on Tuesday February 27, 2019. Photo: SCMP/Simon Song
The chairman of the China Securities Regulatory Commission (CSRC) Yi Huiman during a press conference in Beijing on Tuesday February 27, 2019. Photo: SCMP/Simon Song
China’s stock market slumped last week as the 25 per cent import tariff by the US on Chinese goods went into effect on Friday after talks to resolve the year-long trade war ended in impasse.
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