China's capital market in key transitional period
(Xinhua)
Updated: 2006-05-05 13:11
The capital market in China is now amid a crucial period of transition with
major opportunities of growth, thanks to the country's sweeping share reform, an
official with the China Securities Regulatory Commission (CSRC) said.
After four years of bearish market, the Chinese stock market rebounded
by a little over 40 percent with an improved confidence of investors during the
past 11 months since June, when the country's major index slumped to an eight
year-low.
On April 28, the last trading day before the market closed for
the ongoing week-long International Labor Day Holiday, the Composite Stock Index
on the Shanghai Stock Exchange, however, closed at 1440.22 points, the highest
since it hit an eight year low of 998 points last June.
A senior CSRC
official ascribed the change for the better mainly to restructuring of the share
reform, also known as split share structure reform, and improved legal framework
for listed firms and corporate governance.
The split share structure
refers to the existence of both tradable shares and about two thirds of shares
used to be owned by the state and legal persons as non-tradable ones. To make
all their shares tradable, listed companies participated in the reform have to
offer additional shares or funds to public investors as compensation.
The reform has been viewed by the regulator and investors as vital for
the capital market to function as an open and fair market for both majority and
minority public share holders.
In addition, China also revised its
Securities Laws and Corporate Laws to better regulate listed firms.
The
Chinese capital market is now related more closely to the country's
macro-economic situation, the official said.
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