The day after Xu Xiang was arrested by the police, several concept stocks of Zexi Investment, where he worked, suffered major bearishes, concept stocks such as Kangqiang Electronics and Huali Family fell to a halt, while Seven Star Holdings, which had been suspended, fell by 44% again after resuming trading.
Some insiders said that during the critical period of the stock market rebound, Xu Xiang's arrest was a major blow to the stock market in the short term, and it was difficult to really change the speculation of the stock market just by grasping Xu Xiang. However, Yang Fan, an economist in China, believes that although Zha Xuxiang will have an impact on the stock market, it is the right thing to do, and "these people should have been arrested a long time ago."
Late at night on Sunday (November 1), a photograph of a man in shackles and a white Armani suit began to go viral. The man in the photo is the legendary "private equity brother" Xu Xiang, the legal representative and general manager of Zexi Investment Management Co., Ltd. According to the information released by the Ministry of Public Security, Xu Xiang and others obtained insider information on the stock market through illegal means, engaged in insider trading, and manipulated stock trading prices, and their behavior was suspected of violating the law and committing crimes, and was recently taken criminal compulsory measures by the public security organs in accordance with the law.
In June and July this year, China's stock market was plunged into a violent shock, and even once showed a scene full of green. However, the net value of the five products of Zexi Investment managed by Xu Xiang all bucked the trend. According to reports, during the volatility of the A-share stock market, the cumulative net value of Zexi Phase 1 and Phase 3 both rose by about 43%.
Yang Fan, an economist and professor of economics at the China University of Political Science and Law, said that it was only a matter of time before Xu Xiang was arrested, because he was engaged in a monopoly, not a market economy. "Xu Xiang I know that this person is all those speculative capital in Zhejiang, for many years, very bold, very good at deceiving people. I've always done these things... They mainly manipulate the stock market. He said.
Is the capture of Xu Xiang a delaying tactic for the loss of the pawn to protect the car?
Along with Xu Xiang, there was also a case of Iston manipulating futures involving transactions of more than 11.3 billion yuan. The company was accused of opening multiple stock index futures accounts to buy and sell stock index futures on the Shanghai Exchange.
On August 29 this year, zexi investment issued a "clarification announcement" on the homepage of its official website to deny being investigated, and said that "since the establishment of the company, it has never opened a stock index futures account nor engaged in stock index futures trading." Therefore, the market generally believes that Xu Xiang may have effectively controlled his position before the stock market crash and successfully bottomed out after the "national team" rescued the market.
Although Xu Xiang's arrest has caused the stock market to applaud, Xia Yeliang, a visiting researcher at the Cato Institute, believes that Xu Xiang is only a small role in the huge interest group that manipulates the short stock market, just a so-called "scapegoat".
He said, "Basically, the people who sit on the bank and participate in gambling are basically their own people, members of the interest group." It's the lost pawn. You say that it is a big black patch from top to bottom, and those who can really get the benefits, will the real powerful families really touch their interests? He must have sacrificed a few minions to confess as a scapegoat. I don't think it's that simple. ”
Xia Yeliang also said that although Xu Xiang and Easton companies seem to be very happy to be viewed, the power of these two companies alone is far from being able to truly manipulate the stock market. "Some of the people who have benefited from it may not have really been touched." He said.
Is now a good time to clean up the stock market?
Since July this year, the Ministry of Public Security has launched a series of actions to crack down on illegal crimes in the securities and futures markets. According to media reports, the central inspection team will also be stationed in 14 units such as the Securities Regulatory Commission, the Central Bank, CITIC Group, Chinese Life insurance in the near future. Xiao Gang, chairman of the CSRC, also expressed his full support for the inspection and took the initiative to accept a "comprehensive physical examination".
Successive heavy blows to rectify and regulate the stock market will inevitably have an impact on the direction of the stock market. Some industry insiders believe that the rebound of the stock market in October will be suspended, and it will still be a state of shock in the following months. But even so, the dust and dirt that China's stock market has accumulated over the years does need a major purge. However, there are also views that question the difficulty of investigating and handling individual cases to have a fundamental impact on the stock market and require institutional changes.
Zhong Dajun, director of the Dajun think tank, said in an interview that the management's rectification of the stock market at this time is not negative news, but a very necessary approach.
"China's stock market has institutional problems, as well as some illegal operations in the market. That is to say, now we must grasp both hands, and the problems in your system must also be changed and grasped, so some illegal speculators in your market must also be managed... There are always some opponents abroad who always look at the Chinese government's approach with a different mentality. The government has managed the market, and some people have come to give advice. So would it be nice for you to let these illegal trading companies engage in illegal speculation here and pit these stock investors? That's not good, right? He said.
How should the stock market be straightened?
Zhong Dajun also added that the problem of the government now is not that it manages too much, but that it does not manage enough.
Professor Yang Fan also agreed that the government should manage some illegal transactions of large households, but he said that the current stock market system does not need to be changed. "The stock market is pretty much the same, there's nothing to reform. This time, the mistake is that there are too many reforms, and we should not engage in stock index futures at all. He said.
He said that small and medium-sized investors account for 80 percent of China's stock market, which is different from the situation in which large stock markets and institutions in Europe, the United States, and Europe and the United States account for the majority. The characteristics of stock index futures are more conducive to large investors to speculate in stocks.
Hong Rong, a well-known financial expert and director of the Great Wisdom China Private Equity Research Institute, criticized stock index futures on Weibo on October 26 this year. He said, "Stock index futures have become a tool for one group of investors to hunt down another group of investors, directly or indirectly." Because in our country, this stock index futures tool is only available and capable of being used by some people. The people he refers to who "have the ability to use" stock index futures tools are what people usually call "big investors."
Yang Fan believes that the most urgent change for the Chinese government at present is not to add any measures, but to cancel stock index futures.
"Your government's policy must protect these, most basically, these small and medium-sized shareholders," he said. We can't design something, no matter what kind of banner, to help those big households, those institutions, those who have a lot of speculative capital, to bully those small and medium-sized shareholders. The fault is in this place, the position is not right... All such things, things that cannot protect small and medium-sized shareholders, and things that cannot be managed, should be abolished. This is a fundamental question of position. ”
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