SHANGHAI, June 6 (Reuters) – China’s top securities regulator on Saturday urged the country’s $13 trillion fund industry to support domestic innovation, but warned against excessive speculation and concept hype.
Wu Qing, chairman of the China Securities Regulatory Commission (CSRC), told a conference that fund managers must not make blind bets on certain sectors or launch funds when share prices are high to make a quick buck.
His call comes amid fierce Sino-U.S. competition in technology, and global investor fever toward artificial intelligence.
“China’s booming emerging and future industries urgently needs capital support,” Wu said in a speech posted on the watchdog’s website.
China’s fund industry should focus on national strategies, and also “needs to improve global competitiveness and the ability to cope with external shocks.”
Wu’s speech came a day after the CSRC tightened oversight of the country’s $3.4 trillion private fund industry, and weeks after Beijing clamped down on “illegal” cross-border investment.
Meanwhile, volatility is increasing in global markets. On Friday, U.S.-traded chipmakers plunged, wiping out about $1.3 trillion in market value.
“External uncertainties are rising, global financial markets are fluctuating at high levels and global assets are undergoing a major rebalancing,” Wu said.
“At the same time, a new wave of technological revolution led by artificial intelligence urgently needs a more compatible financial system.”
Wu urged China’s private equity firms to play a more “strategic and fundamental” role in supporting innovation, and step up long-term investment in early-stage, hard-technology start-ups.
Fund managers should also embrace new technologies such as AI to empower their business, Wu said. But he warned against concept hype, convoluted investment structures and excessive speculation.
Regulators will also tighten supervision of computer-driven program trading to create a more level playing field and prevent unfair use of technologies, Wu said.
($1 = 6.7655 Chinese yuan renminbi)
(Reporting by Shanghai Newsroom; Editing by Kim Coghill)