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Dear Vice Chairman Fang Xinghai, Executive Vice Mayor Wu Qing, Distinguished Guests, Ladies and Gentlemen:
Good morning!
Our warm welcome goes to all the guests attending the Fifth Hongqiao International Economic Forum's parallel session on "High-Quality Opening-Up of China's Capital Market". On behalf of the Shanghai Stock Exchange (SSE), I would like to extend a warm welcome and sincere greeting to all the guests.
Next, based on the SSE's actual work, I would like to share some insights and practices on serving the high-quality opening up of the capital market and helping to build Shanghai International Finance Center.
I. Firmly promoting the institutional opening up of the capital market
The Report to the 20th National Congress of the Communist Party of China (CPC) delivered by General Secretary Xi Jinping has profoundly pointed out that we should promote high-level opening up and steadily expand the institutional opening up in terms of rules, regulations, management and standards. In recent years, in accordance with the overall arrangement of the CPC Central Committee on capital market opening up, under the leadership of the China Securities Regulatory Commission and with the strong support of all parties, the SSE has actively improved its systems, innovated its mechanisms, consolidated its foundations and optimized its rules, and made some positive progress in promoting the market from partial pipeline opening up to an institutional opening up in all respects.
The first is the increasingly mature system and mechanism for international investors to participate in the A-share market. With the continuous optimization of Shanghai-Hong Kong Stock Connect and QFII rules, international investors have been provided with convenient and efficient services. At present, foreign capital accounts for nearly 10% of the SSE's average daily trading volume. With the continuous improvement of mechanism and the gradual extension of target scope, the Shanghai-Hong Kong Stock Connect has become an institutional framework with high expansibility, which is considered a successful exploration of Chinese modernization in the area of capital market opening up.
The second is that the Depository Receipts business under the Stock Connect Scheme has built a unified institutional framework for enterprises' cross-border financing. After its successful launch, the Shanghai-London Stock Connect was further expanded into the Depository Receipts Scheme, currently covering three overseas markets, namely the UK, Switzerland and Germany. A total of 8 listed companies on the SSE issued GDRs, raising over 7 billion dollars. The new scheme serves an institutional basis and rule precedent for the issuance of depositary receipts by overseas enterprises on the SSE.
The third is steady practice of opening up of SSE's bond market. The "Belt and Road" Bond Management Code has been formulated. With relevant business moving from pilot to regular, foreign issuers have issued a total of over 100 billion yuan of panda bonds and "Belt and Road" bonds on the SSE. Recently, together with China Securities Depository and Clearing Corporation Limited, we issued special rules to support foreign institutional investors to directly open securities accounts for the participation in bond investments on the SSE.
The fourth is to take an active part in international industry governance and jointly formulate international industry standards. In the field of sustainable and green finance, the SSE has taken the lead in formulating the Principles for Sustainable Exchanges by the World Federation of Exchanges and participated in the development of guidelines on climate information disclosure for global issuers and other matters, thus strengthening its alignment with international standards and actively contributing Chinese wisdom and solutions.
Besides, we have always attached great importance to the communication and exchange with international investors. Since 2019, we have held three consecutive SSE Global Investors Conferences. Nearly 3,000 domestic and foreign institutional investors and over 300 representatives of world-renowned financial institutions shared new opportunities for investment in China's capital market at the conferences. The fourth conference will be held next Wednesday. You are welcome to attend it and show your support.
II. Actively participating in the building of Shanghai International Finance Center
From the overall height of China's reform and opening up and socialist modernization, the CPC and the State Council launched a major national strategy of building Shanghai International Finance Center, which carries the important function piloting in the field of finance. As a critical financial infrastructure located in Shanghai International Finance Center, the SSE strives to be a "front-runner" in the reform and opening up of the capital market. Over the years, we have persevered with integrity and innovation, forged ahead with courage, and taken the lead in launching the Shanghai-Hong Kong Stock Connect, Shanghai-London Stock Connect, ETF options and China-Japan ETF Connectivity. We have established the STAR Market, and piloted innovative measures such as the registration scheme and the STAR Market maker system, with a view to contributing to the strategic goal of Shanghai International Finance Center to build "two centers, two hubs and two highlands".
The first is to help optimize the development pattern of Shanghai's financial market and enhance its core functions. By constantly strengthening our investment and financing functions, we contribute to building Shanghai into a new growth pole for financial services. In the past decade, 1,250 new companies have gone public on the SSE, raising nearly 1.7 trillion yuan in IPO financing; a total of 26.4 trillion yuan of corporate bonds have been issued. At present, the total market value of SSE stocks is 45 trillion yuan, ranking 3rd in the world; the total amount of outstanding bonds reached 16 trillion yuan, ranking number one for exchange bond market; the ETF turnover and market size rank 1st and 2nd in Asia respectively, and the trading volume of ETF options ranks among the top among peers in the world. The pilots of publicly offered infrastructure REITs launched last year were conducted smoothly. Twelve products have been listed, raising 39 billion yuan and driving nearly 200 billion yuan of investment, suggesting huge potential.
The second is to help Shanghai's financial market implement national strategies and promote reform and innovation. Since 2018, the SSE has been deeply advancing major reform tasks of setting up the STAR Market and piloting the registration scheme. Up to now, there have been 483 listed companies on STAR Market, with a total IPO financing of over 730 billion yuan and a total market value of over 6 trillion yuan. A market ecosystem supporting scientific and technological innovation has taken shape, making it the first choice for enterprises with "key and core technology" to go public. With the increasing linkage effect between Shanghai International Finance Center and Science and Technology Innovation Center, the city's function as a source of science and technology innovation has been further strengthened.
The third is to help build Shanghai's financial market into an international green financial hub. The SSE substantially supports the listing of green enterprises, encourages listed companies to disclose their social responsibilities, and energetically develops green financial products. So far, more than 120 new energy and energy conservation and environmental protection enterprises have gone public, more than 800 green corporate bonds and asset-backed green securities have been listed, with a custody volume exceeding 370 billion yuan. Ninety-three green-related indexes have been released, and green-themed ETFs reported a total market value of nearly 30 billion yuan.
III. Steadfastly promoting the reform and opening up of the capital market under the guidance of the spirit of the 20th CPC National Congress
Faced with the complex and severe situation this year, the capital market has withstood the test, demonstrating good resilience and vitality. In terms of helping stabilize the macro economy and reasonably keep expectations, it has played a positive role. On the Shanghai stock market: The first is the effective play of its financing function. With the largest IPO financing volume in the world during the same period, the financing and development of companies in the real economy have a strong backup; the second is the steady performance of listed companies on main board. In the first three quarters, their operating revenue and net profit grew by 8% and 5% year on year, respectively, hinting at strong resilience; the third is the continued satisfactory performance of the STAR Market. In the first three quarters, its operating revenue and net profit increased by 33% and 25% year on year, respectively, suggesting sound growth. As the country's package of policies and follow-up measures to "stabilize the economy" were successively implemented, the national economy has continued to recover. As a mega market, China has great potential, strong resilience and remarkable vitality, so we remain confident about the long-term and healthy development of its capital market in the future.
Next, we will continue to implement the task of deepening reform across the board. The SSE will adhere to the "three principles" of the registration scheme reform, earnestly assume its responsibility as the subject of reform implementation, further play the role of a pilot zone for STAR Market reform, and optimize the systems and mechanisms of listing review, issuance underwriting and trading.
We will constantly enhance our capability of serving scientific and technological innovation. The SSE will insist on the "key and core technology" positioning of STAR Market, encourage and support more enterprises with "key and core technology" to go public, and create a favorable market ecology to support science and technology innovation. There will be active support for the issuance of sci-tech innovation bonds and entrepreneurship and innovation bonds, thus continuously broadening the diversified financing channels for science and technology innovation.
We will constantly promote the coordinated and balanced development of investment and financing. The SSE will steadily promote the innovation of corporate bonds, ETFs, options and other products, so as to better perform its function of market risk management and further meet the wealth management needs of investors. The REITs rules and mechanisms will be optimized to create a new highland for REITs development with international competitiveness.
We will firmly advance the high-level institutional opening-up. The SSE will further deepen the market stock connect mechanism to optimize the channels and mechanisms for international investors to invest in China. We will strengthen cross-border index cooperation to constantly enhance the international competitiveness and influence of China's indexes. We will actively participate in international industry governance, carry out practical cooperation with overseas exchanges, and strengthen the building of regulatory capacity and risk prevention and control under the conditions of opening up.
Dear guests and friends, at the opening ceremony of this year's China International Import Expo, General Secretary Xi Jinping noted that we should commit ourselves to openness to meet development challenges, foster synergy for cooperation, build the momentum of innovation, and deliver benefits to all. The SSE will closely focus on this general request, keep in mind our position as among "top priorities of the country", and insist on "bearing the world in mind". It will more proactively integrate into the overall national development strategy, deeply promote reform and innovation, unswervingly expand opening up, and accelerate the building of a world-class exchange that matches China's status as a great modern socialist country. In doing so, the SSE is expected to make greater contributions to the high-quality opening up of the capital market, the building of Shanghai International Finance Center, and the realization of Chinese modernization.
I wish this conference a great success!
Thank you.
