Foreign institutional investors are welcomed as a force to
stabilize China's burgeoning securities markets and improve
investment portfolios, a top securities market supervisor said.
Zhou Xiaochuan, chairman of the China
Securities Regulatory Commission (CSRS), said the market
watchdog thinks highly of the role such investors play in
developing countries.
"They can help introduce funds and technologies to developing
countries, improve management skills and enhance competitiveness,"
he told the second international seminar on China's securities
market held last week.
Stability, standardization, improved operations and quality are
among the top priorities for the future development of China's
securities market, he added.
China's securities market has undergone rapid growth over the past
decade, said Seiichi Kondo, deputy secretary-general of the
Organization for Economic Cooperation and Development (OECD).
Statistics show the capital value of the Chinese mainland's stock
market last year peaked at 5.4 trillion yuan (US$650 billion), some
60 percent of its gross domestic product.
However, the market tends to fluctuate when its players are largely
individual investors, says Seiichi Kondo.
"It is therefore a priority for China to encourage more
institutional investors."
These institutions would undoubtedly bring competition, but would
help expand the capacity of China's securities institutions in the
long run through cooperation and merging, he said.
For years, China studied the feasibility of attracting overseas
investment through the securities market, by introducing core
institutional investors, said Zhou.
But he noted this would need policy support as well as regulation
and supervision by the CSRC and other administrators.
In
the future, securities regulators would consider the market
situation when they draw up rules, said Zhou.
"In this way, we will hear the market's different voices. The
principle is to create a stable market environment that is
conducive to further development."
Of
the 1,100 firms listed on Shanghai and Shenzhen stock exchanges,
some 200 were privately owned and 70 were Sino-foreign joint
ventures, and numbers were still rising, said Zhou.
(China
Daily June 11, 2002)