Gui Minjie: Foreign Institutional Investors Eye On China's A-share Market

"Foreign Institutional Investors are very interested in China's A-share Market. The annualized rate of return for QFII's investment has reached about 16% since 2003", said Gui Minjie, Deputy to the 18th CPC National Congress, Secretary of the CPC Committee of the Shanghai Stock Exchange (SSE) and SSE Governor, and Board Chairman of the China Financial Futures Exchange, in intensive interviews held in Beijing yesterday.

Gui also disclosed that preparations for treasury bond futures were on a normal track. Great efforts were made to strive for the opening of treasury bond futures in 2012, while no schedule had been made yet.

When it came to the issue of cracking down on insider trading, Gui said that insider trading, a malignant tumor of the capital market, almost exists in every stock market. All the regulatory authorities around the world had taken the crack down on insider trading as one of their major regulatory duties. As an emerging market sprouting in China's economic transition, the country's capital market needs to be perfected gradually in terms of concept, rule, system, and others, as insider trading prevails in the market.

Gui held that reasons for the above problem included the undeveloped corporate governance of China's listed companies, the lengthy decision-making chains in companies, and the considerable insiders of inside information. The China Securities Regulatory Commission (CSRC) had carried out an array of measures against insider trading in recent years. First, efforts were made to boost the crack down on insider trading by 5 ministries or commissions, with great achievements witnessed over the past 3 years. Second, pains were taken to build a registration system of insiders of inside information, which played a key role in preventing insider trading. Third, rule-breaking behaviors were punished as well. Over the past years, importance was attached to crack down on insider trading in the processes of regulation and law enforcement, with a batch of major and typical cases solved. Fourth, the CSRC cooperated with judicial authorities in releasing judicial interpretations to define the behaviors of insider trading, which facilitated the procedures for giving criminal sanctions.

Gui pointed out that it was quite difficult to cope with the problem of insider trading. Where there is a market, there is speculation. The existence of speculation implies the possibility of insider trading. Therefore, regulatory authorities would take it as a long-term crucial task to crack down on insider trading in the law enforcement.

When talking about the support of the capital market for technological innovation, Gui said that while opening the Growth Enterprises Board, expanding the pilot services of the New Third Market, and rationalizing the regional equity market, the CSRC was cooperating with the Ministry of Science and Technology to issue policy documents and make institutional arrangements especially for such problems as the ownership of intangible assets of technology enterprises and the unclear property rights, thus advancing the development of these enterprises and the technological innovation.