An individual investor watches stock prices at a stock exchange in Nanjing, East China's Jiangsu Province on Monday. Photo: VCG

Liu Shiyu, the former head of China's securities watchdog, the China Securities Regulatory Commission, has surrendered to the authorities. The case is thought to shock the markets but is unlikely to have a long-term negative impact on the A-shares,  market analysts say. 

 According to a statement published by the Communist Party of China Central Commission for Discipline Inspection Sunday night, Liu is suspected of violating discipline and Chinese laws. He is now cooperating with the official probe. 

The two bourses dropped Monday. Five minutes after the opening, the Shanghai Composite Index fell 0.13 percent to 2,878.47 points, while the Shenzhen market slid 0.55 percent to 8,950.8 points. 

The declines grew to 0.41 percent on the Shanghai market and 0.93 percent on the Shenzhen market by the end of the afternoon session. 

An employee at a domestic securities company told the Global Times Monday on condition of anonymity that the A-share markets' declines in recent days were mostly driven by external pressure including the China-US trade war.

"Since Liu is not in office at the CSRC now, his surrender to the authorities should not have too much of an impact on the domestic stock markets," he said. 

The US is updating its sanctions against Chinese high-tech companies, with US-based Google suspending business with Huawei, according to a Reuters report on Monday. 

Liu was in office as the CSRC head from February 2016 to January 2019. After stepping down, he became the deputy Party secretary of the All-China Federation of Supply and Marketing Cooperatives. 

The Shanghai market closed at 2,584.57 points as of the end of January, compared with 2,687.98 points at the end of February 2016. 

According to a report from Caijing Magazine Monday, during Liu's tenure as CSRC chairman, IPOs of many urban and rural commercial banks in East China's Jiangsu Province, where Liu came from, were approved, which sparked widespread discontent. 

According to media reports, Liu imposed strict and comprehensive legal management on the domestic financial markets during his three-year tenure at CSRC.  

Apart from strict management, Liu also took strong measures to facilitate IPOs. In September 2016, the CSRC launched an IPO green channel for companies from impoverished provinces, allowing them to get speedy IPO examination approval.