Governor Geng Liang of the Shanghai Stock Exchange (SSE) said at the Shanghai Financial Work Meeting yesterday (February 27) that the SSE, to propel the overall listing pace of domestic companies, would tack active measures to create more favorable systems and market environment for listed companies' merger, acquisition and reorganization. All this will impel further optimization and development of the current listed companies.
Geng pointed out that to accelerate the development of Shanghai's capital market, the SSE would focus on six aspects in its work. One is to encourage merger, acquisition and reorganization for promotion of listed companies' optimization and development.
The other five are as follows:- First is to accelerate the development of blue chip market to attract red chips' direct listing on the SSE. From the viewpoint of market concentration, the market capitalization of the 10 biggest listed companies on the SSE only covered 21.9% of the total by the end of 2002. Nevertheless, by the end of 2006, this rate had exceeded 50%, a preliminary success of Shanghai's blue chip market construction. Geng said that the SSE would continue to admit listing of large-scale blue chip enterprises on the Shanghai securities market, especially the direct listing of Hong Kong's red chips.
- Second is to strengthen supervision for a fair market. The SSE's frontline supervision and administration departments, to provide domestic and overseas investors with a fair investment place, will carry out strict market supervision, with cracking down market manipulation and insider dealing as its focus.
- Third is to improve technology for further promotion of market infrastructure level. Geng revealed that the SSE, to build a world first-class trading platform for the development of Shanghai's capital market, would exert all efforts to propel the official launch of the New Generation Trading System in the first half of this year.
- Fourth is to actively develop the bonds market and the derivatives market. Furthermore, to realize the balance of market structure, efforts will be made to impel the development of three major markets, including the stock spot market, the debentures market and the financial derivatives market.
- Fifth is to accelerate the market's opening up to the outside by actively carrying out international cooperation. It is said that the SSE has so far signed the Memorandums of Understanding (MOU) on cooperation with 27 foreign exchanges in the world and was elected Director of the World Federation of Exchange. In the future, the SSE will further strengthen cooperation with its foreign counterparts to accelerate Shanghai securities market's opening up to the outside to become an internationalized blue chip market.
Statistics show that Shanghai's capital market saw a rapid development in the past year, with the stock indexes, trading volume, raised funds, stock market capitalization and total investors' number all reaching all-time high. 842 companies were listed on the SSE by the end of 2006, with the total market capitalization of RMB7,161.238 billion, up 210% compared with the end of 2005.
The SSE Composite Index closed at 2,675.47 points, up 130.43%, the largest increase rate since 1993. The total stock trading volume, reaching RMB5.8 trillion, ranked No.15 among the global exchanges, with the increase rate ranking first in the world. The average daily trading volume was RMB23.99 billion, with a year-on-year increase of 201%.
The RMB211.562 billion funds raised from the market, among which RMB146.343 billion from IPO, reached all-time high of annual raised funds on the Shanghai securities market, ranking No.6 among the global exchanges and No.2 in Asia.
In addition, the number of investors increased continuously, with a total of 41.0147 million accounts, an increase of 6.36% over the end of previous year. What's more, institutional investors had become more powerful. The Shanghai securities market, with retail investors dominating in the old days, is gradually growing into a new one, with more reasonable structures, supported by institutional investors, as the leading force, and individual investors.