Talking with the guests MICEX CEO Alexander Zakharov stated that MICEX regarded its relations with the Chinese partners as especially important as MICEX had actively used the experience of the Shanghai Stock Exchange when organizing inter-regional currency and stock trades. "It is very important", he stressed, "that in the 10th year of MICEX's history, cooperation between the Russian and the Chinese financial communities enters a new phase which implies the study of possibilities of long-term partnership and integration considering the world tendencies of globalization of capital markets".
The visit of Chinese representatives was organized in accordance with the agreement of developing bilateral contacts and cooperation between the financial communities of the two countries, which was reached in 2001 during the Russian-Chinese forum on banking and financial cooperation.
Discussing economic reforms in China and Russia the parties noted that market infrastructures began to form in both countries almost at the same time and the process of their formation was very intensive. In the first half of the 1990s, economic decline in Russia was one of the biggest in the world, the drop in manufacturing reaching almost 70% by the end of the decade against 1991.
During the same period China joined the top ten of most dynamically developing economies. Foreign capital willingly goes to China as this country enjoys low inflation and the stable exchange rate of its national currency. Speaking about the causes of the Chinese economic miracle President of SSE noted the developed infrastructure of the stock market and attractive investment climate as well as the implementation of the government program of bringing incorporated companies to the stock market.
According to SSE President Zhu Congjiu, during the last decade the number of Chinese companies which enter the market with their securities has grown by 100-150 every year. In 2000, 162 companies used the financial market to attract over 39 bln dollars by issuing shares and share rights, whereas the number of listed companies reached 1088. The volume of capitalization of the stock market in China in 2000 grew by almost 82%, reaching 581 bln dollars, which is comparable to the level of some West European countries. In 2001, the Chinese stock market ranked 11th in the world in terms of the volume of capitalization of the stock market, while considering the Hong-Kong Stock Exchange it ranked 6th. The capitalization of Russian companies reaches only 80 bln dollars, while the number of listed issuers is only about 40 companies.
According to SSE President, the stability of China's financial market is based on such macroeconomic factors as the internal stability of the national currency, which, in its turn, is based on the effective policy of currency regulation and control, the government's targeted policy of developing and strengthening the stock market and the stable development of the internal national debt market with the aim of financing government programs of modernization of the infrastructure of the country's economy.
As MICEX CEO Alexander Zakharov noted at the meeting, the exchange of experience in introducing advanced information technologies on the financial market holds a great potential of business cooperation between Russia and China. Mr. A.Zakharov said that MICEX had twice used the Chines experience. When organizing the Russian exchange currency market, MICEX used the mechanism of rate fixing (the marginal price method) similar to that previously used on Chinese exchanges. Then, when creating the electronic trading system of the securities market, MICEX used the Shanghai Stock Exchange's experience to develop its hardware and software complex. This cooperation is becoming more topical considering today's challenges such as the introduction of information technologies and the globalization of capital markets.
The participants of the meeting noted that both parties needed to broaden the use of each other's experience in developing financial markets, which play the key role in forming auspicious investment climate and reaching macroeconomic stability. The parties expressed their wish to further develop business contacts between the Russian and the Chinese participants of the securities market, including professional associations and infrastructure organizations, and broaden the exchange of information and the use of each other's experience in developing financial markets.
The Shanghai Stock Exchange was established in 1990. Being China's leading stock floor SSE is a non-profit-making organization, which has over 300 members. SSE's listing includes shares and bonds of 624 enterprises with combined market capitalization of over 3 trillion yuans, which constitutes about one third of China's GDP (as of August 2001). Chinese issuers have attracted about 350 bln yuans by placing their securities on SSE. The Shanghai Stock Exchange has an advance electronic trading system, to which about 5000 terminals are connected.
