To build the Shanghai Stock Exchange (SSE) into a mature customized bourse for China's national conditions, renewed efforts are needed for building blue-chip market, developing bonds market, diversifying trading varieties and modes as well as strengthening infrastructure construction, SSE Governor Geng Liang said yesterday in Beijing at the "20th Anniversary Symposium of China's Capital Market".
"Two decades ago when it was born in the historical backdrop of China's reform and opening up, the SSE had only eight stocks with RMB1.2 billion market capitalization, and merely RMB807 million trading volume in the first year after its opening. Thanks to 20 years' efforts, the SSE has evolved into a major exchange in the world, boasting over 890 stocks with RMB18.5 trillion market capitalization and RMB126 billion average daily trading volume." Geng said that with the ever-increasing market size, the SSE has seen a steady improvement in market quality and maturity.
A style change from short-term to medium and long term investment is emerging in the market at present. The rising market capitalization of the shares held by over 50,000 institutional investors accounts for 74% of the total on the SSE. The turnover rate tumbles from 920% in 2007 to 190% in 2010. The proportion of medium and long term investors is on the rise from 53% in 2007 to 66% this year. Besides, with a sharp fall in volatility, the market stability is enhanced. To be specific, the number of trading days seeing over 2% price fluctuation in the main board is 13% of the total trading days in 2010, while in 2008 and 2009 these figures were 44% and 25%, respectively. Finally, the barometer role for national economy is looming increasingly obvious as the main indicators of the SSE-listed large-scale blue-chip enterprises, which cover all key industries of national economy, are mirroring the profile of the national economy. According to Geng, the soaring market capitalization of the SSE-listed stocks from RMB2.3 trillion in 2005 to RMB18.5 trillion in 2010 after the equity division reform lays a solid foundation for the growth of the SSE market. To ensure safe market operation and maintain market stability, the SSE boosted technical renovation in the past few years, keeping its safe operation rate at over 99.9%.
Eyeing the development goal of a world-class blue-chip market, the SSE listed in the past five years 81 large-scale high-quality enterprises, with a total market capitalization of over RMB10 trillion. Furthermore, 134 SSE-listed companies underwent merger and acquisition, with RMB720 billion assets injected. At present, another 64 listed companies are under significant reorganization. All this contributes to a solid foundation for developing the SSE blue-chip market.
In the past two decades, the SSE consistently formulated and perfected self-regulatory business rules, and created a self-regulatory mechanism with the SSE Articles of Association as the main body, the listing rules, trading rules and membership management rules as the supporting one, and the detailed business implementation rules as the supplementation. At present, the SSE has over 200 valid business rules, forming an integral part of the legal system of the capital market.
In terms of front-line supervision, the SSE tightened its crackdown on market manipulation, insider dealing and rat trading. In 2009, the SSE reported 53 clues for various illegal trading, issued 557 supervisory attention letters and investigated 590 abnormal transactions.
In Geng's opinion, the SSE will, in the days to come, stress the following five aspects of work in a bid to build itself into a mature bourse tailor-made for China's national conditions. First of all, the cornerstone of a multi-layer capital market will be consolidated by giving birth to a blue-chip market. In the second place, priority will be given to developing the bonds market for a bigger proportion of direct financing. Thirdly, market innovation will be encouraged for diversified trading varieties and modes. Fourthly, infrastructure construction will be furthered to secure safe operation. Finally, a learning bourse will be built to reinforce personnel training.