http://www.bjreview.com MARCH 26, 2020 BEIJING REVIEW 35
Copyedited by Rebeca Toledo
Comments to lixiaoyang#bjreview.comBUSINESS
The delisting system is expected to help
sTueeze malperforming firms out of the
market as investors’ options increasingly
widen. Changsheng Biotechnology, a major
vaccine producer based in Changchun, Jilin
Province in northeast China, was asked to
delist by the Shenzhen Stock Exchange due
to market malpractice in late 2018. The pro-
cess was completed in November 2019 after
trading of its shares was suspended for eight
months. Before that, its stock price dropped
sharply, causing great losses to investors.
“A sound mechanism of efĶ cient delist-
ing can channel investment into high-Tuality
companies and phase out zombie enter-
prises with junk stocks, which can improve
the capital market,” Dong said. Data from the
CSRC showed that a record 18 companies
were delisted from the A-share market in
2019.
Dominated by individual investors with
strong speculative sentiments, China’s stock
markets have remained volatile. According
to Xu, the transaction share of individuals in
the A-share market still stands at about 80
to 90 percent, higher than those of mature
capital markets across the globe. Since the
phenomenon can be attributed to the lack
of institutional investors, the revised law
encourages the development of investment
institutions such as securities and fund man-
agement companies, as well as traditional
Ķ nancial institutions like banks, to help indi-
viduals with investment management.
“The measures can help reduce indi-
vidual investors in the stock market, better
protect their interests and improve market
efĶ ciency,” he said.
The road ahead
The revised Securities Law has made notable
innovations, according to Xu, while the gov-
ernment still needs to improve its provisions,
ensure enforcement and promote financial
innovation to make the securities markets
more market-oriented, rule-based and
internationalized.
Traditional financial and intermediary
institutions should be encouraged to par-
ticipate in direct financing to build more
diversified and multi-tiered capital market
systems to protect the interests of investors
and boost the real economy. Regulation and
control also need to be improved to resolve
Ķ nancial risks, he added.
Although the promotion of the registra-
tion-based IPO system is strengthened by
the law, the road is not going to be smooth.
As Liu stressed, the trial of the system on the
sci-tech board has seen initial progress and
can be widely adopted for the issuance of
stocks and bonds, but the number of regis-
tered companies is below expectations and
the effects remain to be observed. Most im-
portantly, the reforms need to be launched
step by step.
The current priority is to improve the
rules and regulations and supporting sys-
tems for the revised law, Liu said, while Yi
Huiman, Chairman of the CSRC, told Xinhua
that the CSRC will draft and revise supporting
provisions in line with the revised law to im-
prove the capital market regulatory system.
To build the domestic capital market
soundly, China will also improve its bond
market. Data from the People’s Bank of Chinashowed that China’s total outstanding bonds
had reached 100.4 trillion yuan (14.43 tril-
lion) by the end of January, making it the
world’s second largest bond market.
In 2019, the net financing of corporate
bonds accounted for nearly 13 percent of
the total value of social Ķ nancing. Corporate
bond issuance has become the second
largest fundraising channel for domestic
enterprises besides getting loans, the central
bank said.
According to Li Shuguang, dean of
the graduate school at China University
of Political Science and Law, the revised
Securities Law highlights improving regula-
tions on corporate bond issuance but does
not cover the interbank bond market, which
may cause systemic financial risks. “Since
China has seen a rapidly growing bond mar-
ket, it needs to continue to formulate bond
laws for targeted regulation,” he told Beijing
Review. QA view of the Shanghai Stock Exchange on June 13, 2019, when China inaugurated its science and technology
innovation boardXIN
HU
A