Under the chairmanship of Xiao Gang, the organisation succeeded in revealing the flaws in its own undertakings as well as the negligence with which it operated in by allowing unscrupulous companies list on stock exchanges with shady financials and backgrounds that would raise the hair on the necks of most global investors who've become accustomed to an accepted standard worldwide.
On a number of occasions these issues were raised by media houses but to no avail until chaos set in with reputational damage inflicted at the highest possible levels. From there onwards the pressure to remove Gang ensued up to his dismal in January and being replaced with a better suited candidate in former Chinese Agricultural Bank chairman, Liu Shiyu.
You can read more about this shake up by following the link.
A few weeks back I decided to review how well Shiyu had done three months into his new job and concluded that a number of measures he was putting in place in terms of transparency of reporting together with a stricter criteria when issuing additional stock to shareholders were signs that the CSRC was on the mend and would benefit greatly from this boost in confidence.
Needless to say the rot that set in under the tenure of Gang will inevitably be with investors for some time yet with the latest news out of Wall Street reporting that Alibaba, described as the Amazon of China, is being investigated by the Securities Exchange Commission over the methods it uses to report sales numbers from its hugely successful "Singles Day" campaign.#Alibaba is taking fire again...This time from the SEC over its #accounting methods: https://t.co/DFNhxJhoXx $BABA via @CRrileyCNN— CNNMoney Investing (@CNNMoneyInvest) May 25, 2016
This isn't the first time doubt has been raised over the variability of actual versus reported growth numbers with many analysts saying the numbers are "cooked" to make the outlook shine brighter than what it seems.
Financial publication house Barron's dug its heels in when it fronted a story that said the company was poised to lose a further 50% market cap devaluation as was speculated by analysts in the industry. This led to founder and chairman Jack Ma to respond back harshly to this assessment of the company saying it was in the driving seat when it came to profiting from the Chinese internet boom and the fears some investors may have in relation to the deepest of the slowdown in China were unfounded.
It should be noted that the company's stock price performance since its listing has been poor given the fanfare it received on the first day it traded publicly on the New York Stock Exchange.
The latest news comes as another blow for the internet giant whose struggled to establish itself as a reputable company worth investing in at a time when Chinese stocks should be thriving from capital inflows with a mountain of opportunities that beckon which brings me to my next point.
Properly regulating Chinese equities not only has a positive impact on locally listed companies but also on those firms such as Alibaba by opening up the doors of possibilities to future investors whether they be based in London, Tokyo or even New York. The ill-equipped stock regulations in China has failed to prepare potential multinational companies to conform to international standards that directly lead to steady investments thus damaging their image.
Perhaps its harsh to judge the Chinese who lack expertise in this field but its also fair to say that its been afforded ample time and patience to implemented proper practices yet decidedly used the chance to fill bureaucratic posts for prominent members of its ruling party.
If government is committed to steady the hand of investors it needs to stress the priority of finding a balance where the interests of public funds are held in the highest regard and the dealings by the companies seeking capital are monitored with hawkeye vision to ensure sufficient investor confidence remains sustainable over the long term.
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