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China's stock regulator reins in risqué cyber-celebrity analysts

[SHANGHAI] China's securities regulator has ordered brokerages to restrain their staff's online activity, two sources with direct knowledge told Reuters on Thursday, after some were judged to have used attractive women analysts to drum up business.

Chinese brokerages are struggling to rekindle investor interest after a stock market crash in 2015, and some analysts have become cyber celebrities though their social media campaigns to encourage customers.

"Stock analysis was a serious business and now it's started to resemble the entertainment industry," said Zhang Gang, analyst at China Central Securities.

"They lower the professionalism of the business. It's about time for at least some crackdown."

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In a note circulated to brokerages, the China Securities Regulatory Commission (CSRC) urged them to regulate the use of social media to promote research reports, the sources said. "It's in response to an increasing number of analyst-turned Internet celebrities," said an analyst at AJ Securities.

The CSRC also demanded tighter quality control in producing research reports, the sources said, after a report headlines judged to be vulgar.

The CSRC did not respond to requests for comment.

Some brokerages offer new clients sightseeing tours, host beauty contests, or hire svelte female analysts who appear to spend most of their time uploading pictures of themselves revealing their underwear to their micro-blog accounts.

Criticism intensified this month when a Founder Securities analyst broadcast her research report from home dressed in a flowery kimono. The video got at least 100,000 views online.

Other celebrities include a female coal strategist at Haitong Securities who broadcasts her insights online.

"These Internet star analysts have no shame, recommending people to go long on stocks," wrote one irate netizen. "They don't care whether they are right or not, they just pander to the audience for fame."

Founder Securities and Haitong Securities declined to comment. The strategy is not limited to those two brokerages. "I would never film myself broadcasting my research," said a female analyst at one of the top three brokerages, speaking on condition of anonymity. "I want to be judged on my research, not my face."

The government itself has not escaped criticism from feminists. State media often runs photo features of attractive women, sometimes billed as "beautiful scenery".

Nor has state media served as a model of responsible stock market analysis.

In the run-up to the crash last year, major state-owned financial media outlets were encouraging readers to buy more shares, predicting a long-running "structural bull market".

Chinese markets dropped more than 40 percent shortly afterwards and have yet to recover.

REUTERS

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