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Über dieses Buch

Both quantitative and qualitative analysis is used to review China's stock market in a book containing the latest research on China's IPO market, the 2006-07 market bubble, the development of institutional investors, the stock index futures market, stock sector performance, corporate governance of listed firms and China's growth enterprise market.



1. Review of China’s Stock Market from 2002 to 2014

The history of China’s securities exchange can be dated back to the early 20th century, with the first-ever stock in China issued by the China Merchant Steam Navigation Company (established in 1893). In 1914, the Beiyang government enacted the securities transaction law and, in June 1918, founded the first securities exchange in China: The Beijing Stock Exchange. The Shanghai Huashang Stock Exchange followed in 1920. China thus entered the era of stock exchanges during the period of the Republic of China. Being highly lucrative, a number of trust companies and exchanges were set up nationwide, but after the First World War the stock exchange and trust companies began to exploit each other, giving rise to rampant stock speculation. However, trends reversed relatively quickly. As foreign private capital flowed into China and the central bank tightened the money supply, stock prices slumped sharply and many exchanges and trust companies collapsed. The ‘unrest of trust companies and exchanges’ of 1921 began.

Ping Li

2. Market-Oriented Reform of China’s IPO System and Information Disclosure Regulations

Reform of the issuance system of new shares is at the core of China’s stock market development. The reform can enhance issuance efficiency, strengthen price discovery for stocks, optimize resource allocation and is of great significance for the sound development and further improvement of the stock market. China’s IPO system, plagued with inherent flaws, has always been controversial; but it keeps evolving and improving. This chapter discusses reform and evolution of China’s IPO system from three perspectives: The regulatory system, issuance procedures, and pricing methods. Based on discussion and analyses, it concludes that China’s IPO system should graduate from an administrative approach to a market and law-based one. This is based on both theoretical logic and market realities. This chapter also conducts case studies of China’s IPO practice, and 1,351 listed company that have undertaken IPOs between 1992 and 2007 are used as samples to discuss how market-oriented reform of the IPO system influences pricing efficiency. According to the case studies, China’s IPO system reform has given underwriters more choices and more pricing power, thus curbing excessive underpricing and enhancing the long-term performance of IPO companies. This chapter also points out that the most prominent problem during issuance of new shares is information disclosure noncompliance. Taking Yunnan Greenland Biological Technology Co., LTD and Wanfu Biotechnology as examples, this chapter analyzes problems in China’s IPO information disclosure regulatory system.

Chen Su, Jing Yu

3. Institutional Investors in Chinese Stock Markets

From 1993 to 2013, the institutional investors in China’s capital market have been booming. The types of investors have expanded dramatically, from solely public offering fund companies to more than 10 types of institution, such as the Social Security Fund, insurance asset management companies, assets managements under securities companies, trust companies and so on. At the end of 2012, the NPC Standing Committee adopted the revised Law of Investment Securities Fund in which they specially added the tenth chapter, Non-Public Offer Fund, bringing non-public offer funds under supervision. This is the first time the legal status of non-public offer fund was recognized. In June 2013, the Office of Central Institutional Organization Commission issued Notification of Assignment of Responsibility Regarding Private Equity Fund, which clarified that the private equity (PE) Fund is under the supervision of the CSRC (China Securities Regulatory Commission). As a result, they also have become institutional investors in capital markets under the governance of the CSRC. The growth of institutional investors in Chinese capital markets has had some difficulties. However, they are a force that cannot be ignored. The market value of their shareholdings has boosted, from five funds of CNY4 billion (less than 1 percent of the whole market value in 1998) to 10 percent at a valuation of CNY2.25 trillion now. This is tremendous progress. In the domestic capital market they function not only as a resources allocator, but also a value guide. However, because of its unique development history, the Chinese stock market’s investor structure of a high percentage of individual investors but a low percentage of institutional investors is very different when compared to a mature market.

Yuwei Sun, Zheng Zheng, Huiyan Dong

4. Characteristics of Different Styles and Sectors in China’s Stock Market

As the market develops, the characteristics and patterns of China’s stock market have changed greatly. Likewise, the performance of different types of stocks has varied widely. In order to distinguish one type of stock from another, stocks are classified into sectors by region, country, style, industry, and so on. This chapter studies how the stock market works and changes at the meso-level from the perspective of style and sector. It then observes the development of the entire stock market. The first part examines the conditions and performances of typical large-cap, mid-cap and small-cap stocks, growth stocks and value stocks according to their styles, and explores the characteristics of investor behavior. The second part studies the past and present of representative sectors, as well as the opportunities and challenges they face, according to their industries, to provide further clues for decision-making. The third part, based on the previous analysis, improves the existing schemes for selecting stocks and optimizes sector indices to enable passive investors to make more informed decisions.

Wen Long, Ding Mu Cao, Wenning Yang, Tongyuan Shen

5. Development and Problems of Stock Index Futures and Margin Trading and Short Selling in China

After three decades of development, ever since the word’s first stock index futures - the Value Line Index Futures - were introduced at a Kansas City Board of Trade on February 24, 1982, there have been roughly 400 listed contracts at 43 exchanges in 32 countries and regions around the world. Stock index futures have become one of the most active financial derivatives.

Zhou Zhou

6. Development, Problems and Suggestions for China’s GEM

It took 10 years’ preparation and discussion to establish China’s growth enterprise market (GEM). To cater to economic changes and market developments, China finally took the opportunity to set up its GEM in 2009, after the US subprime crisis. The establishment of the GEM was the result of the ‘boosting’ effect of the capital market on high-tech and high-growth innovative businesses, and an important measure to promote stable and fast economic development. At the same time, as a milestone in China’s multifaceted capital market development, China’s GEM is of great significance in promoting the implementation of independent innovation strategy, economic structural transformation, and in creating a multi-faceted capital market system.

Manhong Liu, Jipei Wang


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