Liu Shiyu takes over as chairman of the China Securities Regulatory Commission, assuming oversight of the world’s second- largest stock market in the wake of last summer’s slump that saw predecessor Xiao Gang criticized for mismanagement. Liu was previously chairman of Agricultural Bank of China Ltd. and was a deputy governor at the People’s Bank of China before that. The reshuffle comes before the nation’s Communist leaders are due to meet next week to set out a new five-year economic plan.

"Consensus in general is taking this replacement as a bullish development," said Hao Hong, Hong Kong-based equity strategist at Bocom International Holdings Co. "The market will be anticipating more supportive policies as the new chairman sets in."

Eoin Treacy's view

The replacement of the stock market regulator following last year’s botched opening of the options market, spikes in volatility and needs for massive government intervention is a positive development. This suggests the administration is willing to use every tool at their disposal to help support the market and dampen down speculative surges. 

The Shanghai A-Share Index has pushed back above the psychological 3000 level and clear downward dynamic would be required to question potential for additional higher to lateral ranging. 

The Hang Seng China Enterprises Index (H-Shares) has pushed back above the 8000 level and a move above 8320 would break the four-month progression of lower rally highs; bolstering potential for a reversionary rally.