China outlines moves to update its markets

China outlines moves to update its markets


China outlines moves to update its markets
Agence France-Presse
TUESDAY, APRIL 26, 2005


Chinese regulators have pledged further changes in the country's equity and fledgling futures markets, the state media reported on Monday.

The China Securities Regulatory Commission will promote the listing of large, high-quality companies in the domestic market while developing a corporate bond market, The China Securities Journal reported.

The setting up of a unified bond market will allow the trading of bonds on markets between commercial banks, the newspaper said.

Other initiatives include expanding the size of equity investment funds and the quota for qualified foreign institutional investors, the system by which overseas banking entities are allocated fund quotas to invest in the domestic equity markets. The commission said it planned to adjust some policies to provide a more favorable investment environment for foreign institutional investors, but no details were provided.

Vowing to severely punish brokerage managers who violate rules or cheat investors, the commission also said it would throw its support behind securities houses' efforts to expand their business.

The brokerages have struggled for profits amid an official crackdown on corruption and a slumping stock market, which has contributed to a decline in public interest in equities.

The commission also wants to accelerate the pace to establish investor protection funds and a framework to ensure security in margin trading, it said.

Insurance investors wanted

China's insurance regulator has told domestic insurers to bring in more strategic investors to help improve their managerial structures, Reuters reported from Beijing, citing The China Securities Journal.

Such strategic investors could be foreign or domestic, Wu Xiaoping, vice chairman of the China Insurance Regulatory Commission, said on Saturday at a conference. Major shareholders currently have too much influence, Wu was quoted as saying.

Beijing wants to inject foreign capital and expertise into the sector, which is facing hundreds of billions of dollars in policy obligations and is rapidly opening to overseas competition.

Foreign players from HSBC Holdings to Goldman Sachs Group have picked up strategic stakes in the country's largest insurers, like China Life Insurance and Ping An Insurance. The government is also encouraging strategic investment in the banking industry, partly to bring in international expertise, and it has told insurers they can work with foreign companies in the asset management business. In February it said the industry could set up six to eight joint-venture asset management companies by the end of the year.

In keeping with its World Trade Organization commitments, China this year lifted restrictions on where foreign insurers could operate and what products they could offer.

Total foreign capital in the Chinese insurance market reached 194.8 billion yuan, or $23.5 billion, in 2003, up from 4 billion yuan in 1999, according to state media.

Copyright © 2005 The International Herald Tribune | www.iht.com