The China Securities Regulatory Commission (CSRC) recently established a non-profit organization (NPO) aimed at protecting investors' interests. And to help investors safeguard their legal rights, the CSRC said the organization will purchase shares of listed companies.
This move is quite confusing. It indicates that the CSRC cannot protect investors without indirectly becoming a shareholder in listed companies. Obviously, this assumption doesn't hold water. Since the CSRC has the authority to supervise companies trading at mainland bourses, it does not need to hold shares of these companies to assert this authority.
Moreover, if the NPO buys stocks with capital from the CSRC, it will be wasting taxpayers' money by putting government funds into the stock market. Also, since it is not playing with its own money, it will lack the motivation real investors have to hunt for pitfalls in the market.
The author is Zhou Junsheng, an economic commentator.
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