Shang Fulin, head of China's securities market watchdog, said
that China's capital market has gone through fundamental changes,
but still faces "a bumpy road ahead."
"China's capital market, fueled by its booming economy, has made
huge strides in the past few years," Shang, chairman of China
Securities Regulatory Commission, said at the Inaugural Annual
Meeting of the New Champions held by the World Economic Forum in
Dalian from Sept. 6 to 8.
By the end of August, the number of listed companies in domestic
stock market exceeded 1,500, notching up a total market value of 23
trillion yuan (3 trillion U.S. dollars). In the past years, China's
securities industry has gone through reforms, industry
restructuring, and stricter supervision.
China's capital market has transformed from excessive
speculation by individual investment to one with better involvement
of institutional investors, which lend greater stability to the
market, Shang said, noting that institutions now hold 44 percent of
the shares in circulation.
While resolving the problems which affected the sound
development of the stock market, the fund-raising environment has
turned better, Shang said.
Statistic show that more than 506.6 billion yuan (68 billion
dollars) has been raised from the domestic securities market since
the split-share reform, which made massive fixed shares tradable,
was finished in the second half of last year. The figure was 107
billion yuan more than the total in the five years before the
reform.
The bullish stock market has indeed surprised many. Fred Zuliu
Hu, managing director of the Goldman Sachs (Asia), said economic
strength partly explains the market's ongoing performance, and the
split-share reform initiated in the 2005 is also an essential
factor revitalizing the market.
"Chinese corporate profitability is at record high, so investor
confidence has come back," Hu said, adding that China needs a more
robust domestic venture capital market and private equity industry
to help smaller local companies obtain capital.
But the robust market was not dearth of looming shadows. Hot
money has kept flowing in through illegal channels and insider
trading is among some severe problems in the securities sector.
"The foundation of the market is still weak, and the
self-adjustment system to prevent and hedge risks is not there
yet," Shang said, expressing the belief that the market will
develop and play its due role in building a prosperous society with
the concerted efforts of all market entities.
The commission will continue to improve legal environment, boost
investor education and develop more finance derivatives to
diversify investor options, the chairman said.?
(Xinhua News Agency September 7, 2007)
