In little over six months as China's top securities watchdog, Guo Shuqing has let loose a flurry of reforms targeting insider trading, market manipulation and dodgy disclosure that have hamstrung China's stock markets even as its economy surges.
But China's more than 72 million retail investors, who account for about three-fourths of trading on the domestic stock exchanges and have been burned repeatedly in the weak and volatile markets of recent years, remain skeptical.
"It doesn't make a difference who's in charge," said Si Jun, a 62-year-old retired taxi driver.
"Markets might go up for a few days after some reform is announced, but then it's all back to normal," he said, summing up the view of many retail investors.
Gaining their confidence - and their hard-earned savings - will be crucial if China is to build up stable markets that can fund world-class companies and generate reliable returns for China's rising ranks of retirees.
All signs so far are that the bold steps from Guo, a former foreign exchange regulator who was most recently chairman of China's second-largest bank, will only gradually convince the country's investing masses to begin sticking with stocks for the long run - rather than ducking in and out to seek a quick profit from what they regard as a largely rigged market.
In a brokerage lobby in downtown Shanghai, Ms. Gen, a 63-year-old retired clerk, watches the ticker board, hoping the shares she bought last year will tick up enough that she can unload them at an acceptably small loss.
"I was so angry, I felt like I was going to spit up blood," Gen said, ruing the losses on some of her stocks over the past couple years, when Shanghai's market was one of the world's worst performers, and wishing she had cut her losses sooner.
"I'm stuck," she said, a phrase echoed by others, also retirees, who countered the tedium of checking stock prices by chatting with friends or knitting. Gen declined to give her full name for fear of reprisals by local officials.
SKITTISH INVESTORS
The Chinese authorities are keen to create a more professional image for their stock markets, in line with their ambition to make Shanghai a global financial hub by 2020 to rival New York and London.
They are pushing ahead with reforms, including steps to internationalize the yuan, which they hope will one day rival the dollar as an international reserve currency. On Saturday, the government widened the trading band that limits the yuan's daily moves against the dollar, loosening a bit its tight reins on the currency.
The appointment of the Oxford-educated Guo, 55, to head the China Securities Regulatory Commission last October, a year ahead of the expected changing of the guard, was also seen reflecting authorities' determination on reform - and confidence that the economy was sturdy enough to handle it.
In the stock markets, where "rat traders" and "black mouths" routinely make headlines with insider trading scandals and pump-and-dump schemes, Guo has his work cut out for him.
The commission launched 387 formal investigations between 2008 and 2011, ranging from improper information disclosure to market manipulation, and including 154 cases of insider trading.
Wang Jianzhong, a stock-picker whose reports could send share prices surging, became China's first convicted stock manipulator last August when he was sentenced to seven years in prison and authorities confiscated 125 million yuan ($19.8 million) he was accused of earning in illicit profits. He was also fined an additional 125 million yuan.
Guo's commission has also aggressively tackled reform of IPO pricing, a major source of losses for many retail investors.
Of nearly 600 stocks that debuted over the past two years or so in Shenzhen, the Shanghai market's smaller southern cousin, more than 85 percent now trade below their debut prices, including 33 that had more than doubled on the first day of trading, according to the exchange.
Nearly 60 percent of retail investors who bought newly listed shares on their first trading day suffered losses if they held them for three months, Guo said in a recent speech.
VICIOUS CIRCLE
As retail investors have lost faith in the market, becoming quick to pull their money at the first hint of trouble, domestic stocks' performance has suffered, feeding a vicious circle that leaves potential investors even more wary of losses.
That partially explains a 36 percent tumble in the main stock index, the Shanghai Composite .SSEC, in 2010-2011 despite robust economic growth and corporate earnings.
That was more than double the drop in Hong Kong's benchmark Hang Seng Index .HSI, which fell less than 16 percent. The Shanghai index has gained 7 percent so far this year in up-and-down trade, while the Hang Seng is up 12 percent.
The dull performance, which puts China's 20-year-old market roughly neck-and-neck with Japan's for the global No. 2 spot behind the United States, contrasts with its economy, which has sped ahead of Japan to become the world's second largest.
But in a year when China's top leadership is set to change, Guo's push for reform has been wide-ranging.
He has launched a campaign to get tougher on insider trading and market manipulation, including by fund managers, looking into more cases and pushing for harsher penalties.
The commission has set up a new office to guard investors' interests and better educate them on financial planning, is reforming IPO procedures to weed out rampant overpricing, and issued draft regulations to crack down on deceptive practices in the futures markets.
Guo is also pushing for more institutional money to enter the market, seeking a steadier flow of professionally managed cash that can smooth out volatility and support valuations in the long run - to help break the vicious circle and make equities more attractive for savers.
The National Social Security Fund, the state pension fund, is starting to manage funds on behalf of provincial pension funds, which will steadily get more of that money flowing into the stock market.
The commission and the foreign exchange regulator also announced this month that they will more than double the amount that foreign institutional investors can invest in China's markets under a quota programme, gradually bringing it to as much as $80 billion from the current ceiling of $30 billion.
Those amounts are still small compared with the overall market, but combined with a mooted system for corporate annuities, these moves can inject an added element of professionalism to the market.
"Time will tell whether Guo's measures are successful," said Howhow Zhang, head of research at Shanghai-based fund consultancy Z-Ben Advisors.
"China's stock market ... is short on sophistication and efficiency, and you won't see changes overnight."
Some bigger players are betting, however, that Guo's moves are effectively addressing the roots of the market's problems.
"We think domestic investors ... will eventually buy in to Guo's capacity to transform the market, which we view as a long-term positive catalyst," HSBC equity strategists Steven Sun, Roger Xie and Garry Evans wrote in a recent note.
($1 = 6.3073 Chinese yuan)
(Additional reporting by Brian Rhoads and Samuel Shen; Editing by Edmund Klamann)
Reuters