The newly-appointed head of the China Securities Regulatory Commission (CSRC) has been charged with restoring confidence to the world’s second largest stock market after several policy gaffes by his predecessor, Xiao Gang spooked investors and exacerbated a $5 trillion rout.

Liu Shiyu, an ex-banker, has been brought on to replace the beleaguered Mr Gang who had faced heavy criticism over a number of policy decisions that had contributed to the tripling of the value of Chinese equities in a short timeframe prior to the market crash last summer.

The crash forced the state to intervene in order to prevent the fallout from the turmoil seeping into an economy that was already growing at its slowest pace in a quarter of a century.

“Mr Gang performed a number of full reversals in policy which seriously dented confidence in the country’s stock market,” explained Jim Brechin, Chief Asian markets strategist at Japan-based broker-dealer, Resona Corporate Partners.

Among Mr Gang’s most visible policy missteps was the abandonment - in the same week it was introduced - of a circuit-breaker system designed to reduced volatility in the market.

“There are nearly 100 million investors in the country’s exchanges and almost 80% of those are in the retail category. The new appointment should also help restore confidence among international investors, many of whom have become more concerned about the pitfalls of investing in what is still regarded as an immature market,” Brechin added.

Despite the turbulence, Resona Corporate Partners says it is still bullish on Chinese equities and expects the central bank, the PBoC, to continue to introduce measured stimulus it hopes will prop up economic growth in the country.
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