The shift comes after Chinese authorities struggled to halt a selloff in the world’s second-largest stock market with piecemeal support measures over the past few months. About US$5 trillion of market value had been wiped out from onshore equities from their peak in 2021, adding urgency for policymakers to do more as the country enters the week-long Lunar New Year holiday.
“More than anything I think it shows the authorities’ resolve to end this rout and to turn things around,” said Huang Huiming, a fund manager at Nanjing Jing Heng Investment Management Co. “Announcing the personnel change right before the Spring Festival, with just one day left to trade, shows that the bid to boost confidence is real, it’s saying to investors that the people at the top care about investment losses.”
The removal of Yi, who has been in charge of the CSRC since 2019, echoes a move to shift the market chief in 2016 after an earlier epic selloff in stocks. The abrupt dismissal of the 59-year old was a surprise as officials of his rank typically retire at 65.
China’s previous moves to name new markets chiefs have proved a success in boosting shares. The benchmark CSI 300 Index rose more than 40% in almost a two-year span after Liu Shiyu was assigned to replace Xiao Gang in February 2016. The gauge rose more than 80% over two years after Liu was replaced by Yi five years ago.
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“It may raise market hopes for more forceful stock market rescue plans after the personnel change,” said Xiaojia Zhi, head of research at Credit Agricole CIB. “Looking at the past experiences, Wu is highly experienced with securities regulations with his work experience in the CSRC as well as in Shanghai Stock Exchange.”
Still, investor reaction to the shift has so far been muted. FTSE China A50 Index futures rose about 0.4% in late Singapore trading. Exchanges in mainland China were shut when the news was announced.
Wu, who’s turning 59 in April, already last year had been tipped to take over at the CSRC. Most recently he was deputy party secretary of Shanghai and has worked closely with Chinese Premier Li Qiang, who was previously party secretary of the nation’s financial capital.
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Veteran
He is no stranger to markets. Wu earlier headed the Shanghai Stock Exchange for almost two years. He held various roles at the CSRC, earning the nickname “the broker butcher” after shuttering 31 firms over regulation breaches. He then oversaw the fund industry until 2010.
Xi has made prevention of major financial risks a top priority while officials strive to boost the post-Covid economy, Wu’s hardline approach and zero tolerance for wrongdoing might put him in the right seat to help achieve that goal.
Wu has also worked at the national planning committee, which later morphed into the National Development and Reform Commission, as well as the State Council’s securities committee, whose functions were later taken over by the CSRC. Wu holds a PhD in economics from the Renmin University of China in Beijing.
Wu’s first test will be to revive China’s stock market. He will also help guide the nation’s financial opening for foreign firms at a time when Wall Street banks have been scaling back their onshore businesses amid geopolitical concerns and economic headwinds.
“The new CSRC head will come in with a mission to revive the markets, which is positive,” said Vey-sern Ling, managing director at Union Bancaire Privee. “Having said that, he is not in a position to resolve structural and economic issues. Investors need to see improvements on those fronts to regain confidence.”
