Saturday, 1 August 2015

Chinese regulators admit making inexperienced mistakes in share crash

Chinese regulators admit making inexperienced mistakes in share crash

Chinese investor on the phone as market fallsPHOTO: Investor and regulator inexperience is being blamed for a Chinese extremely volatile share markets
Chinese officials have admitted that inexperience hampered their attempts to deal with the turmoil on the country's share markets over recent weeks.
Chinese regulators have told a financial forum in Sydney that China needs to improve its share market regulation after a sell-off that saw around $US4 trillion wiped off the value of Chinese stocks since mid-June.
The comments were made at the first regional conference of the Boao Forum for Asia, a China-based conference set up after the Asian financial crisis, holding its latest meeting in Sydney.
Among the high-profile attendees, former World Trade Organisation head Pascal Lamy addressed the forum on the impact of the global financial crisis.
"We all have to recognise that this big '08 crisis started because of a lack of proper international regulation," he said.
"Since then, I think, some progress has been done. Where improvements should take place, at least if you compare it to the trade side, is in the quality of institutions."
Also on the agenda was integrating Asia's financial systems with the rest of the world.
Reserve Bank governor Glenn Stevens said an opening up of China's financial markets could see $400 billion a year in investment in and out of the country.
"The size of the potential capital flows here may be very large. It's very hard to predict," he said.
"They could end up being something of the order of $US 400 billion a year which is a sizeable proportion actually of global capital flows of a portfolio nature.
"If that happens, and I don't know if it will, but if such flows did happen, it's going to be very important that the depth and the quality of financial markets in Asia, in China and around the rest of Asia, continues to develop.
"That's a big challenge but one worth meeting.
China is considering more financial reforms, such as relaxations on interest rates and fewer restrictions on the flow of money overseas.
However, Chinese regulators at the conference also acknowledged that some investors got caught in the recent share market rout because they did not see the risks of share market investing and more investor education is needed.
One official told the forum that authorities were inexperienced in handling the market volatility.
Zhang Xiaohui, assistant governor of the People's Bank of China (PBoC), China's central bank, argued that the country needs to improve its financial system regulation to prevent risks.

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