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Member of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), President of the Shanghai Stock Exchange (the SSE) Zhu Congjiu said to the reporter from the "Shanghai Securities News" on the eve of the opening of the 10th session of the 5th CPPCC meeting that there is no plan for merger of A shares and B shares temporarily. It is optimistically predicted that red chips can return to A shares market. He also disclosed that the SSE is currently making a series of system arrangement in order to create conditions for transfer of covered warrants, margin trading and securities lending and corporate bonds.
No plan for merger of A shares and B shares temporarily
According to Zhu, from the perspective of attracting foreign capital, B shares are an important system arrangement in the history. But at present, the ways to attract foreign capital are various and diversified, which include H shares and QFII. As for the future of B shares, in his opinion, the market will select for it. For the SSE, there is no plan for merger of A shares and B shares temporarily.
As for the recent slump in both A-share and overseas market, Zhu holds that slump is the normal adjustment and fluctuation of the market itself instead of the fundamental reason. This reflects the linkage between China's economy and the world's economy. With China's economy further merging to the world, similar phenomena will happen again. On the flip side, it also indicates that China's stock market is more and more mature. But he doesn't think that the slump of A shares owes to the fundamental factor of China's economy.
He also points out that, the promotion of index futures will neither strike the spot trading market nor impact the general trend of rising in stock market, since the latter is mostly influenced by fundamental factors. On the contrary, the promotion of index futures is positive to the spot trading market, which can both activate the spot trading and hedge the risks in the spot trading market.
Red chips are expected to launch to A shares market within the year
Since last year, with the domestic A shares market becoming hot, return of the large-cap blue chip market has become the trend. Under this background, return of red chips has attracted more and more attention. Zhu said the SSE is doing research on this phenomenon.
Red chips are shares issued by a company incorporated overseas and listed in Hong Kong with main business and controlling shareholders in Mainland Chinese. Zhu said, since red chips are involved in some legal problems, there is no verdict in the return of red chips. But relevant problems are currently under research. He is optimistic about the launch of red chips in the SSE within the year.
As for the suggestions of establishing link trade and arbitrage mechanism between Hong Kong and the Mainland China, Zhu holds that, from the technological perspective, there is no problem. However, the establishment of the aforesaid mechanism is also involved with problems including liquidation, capital flow and foreign exchange management system, which are not decided by the SSE.
According to Zhu, Hong Kong and the Mainland China play important roles in China's capital market, respectively. How to further seek further cooperation is now under research.
SSE's establishment of trading platform for corporate bonds
Concerning the construction of the corporate bonds market, Zhu holds that it is a systematic task including issuance, supervision, listing and trading. As the exchange, the SSE is actively preparing for the trading platform. Now the SSE has developed some systems and arranged some market participants. Meanwhile, it has made some effort on the back-end settlement, such as issuance qualification, information disclosure and credit rating.
As for overall listing of enterprises, Zhu holds that it lies on the enterprise' own demand. If the company thinks overall listing will be good to its long-term development, the SSE has no restriction of the number of listed companies.
Zhu also holds that the SSE is now paying attention to the successful cases of listing of foreign exchanges. It has become the trend to change the membership system to the company system and get listed. He said that, if the SSE were listed, it would be listed on its own exchange.
According to Zhu, from the perspective of the momentum of the current revolution and development of the domestic capital market and the state policies as well as the effort of the industry insiders, capital market is promoting the economic development more and more vigorously, which will further change the financial institutions in China and the excessive proportion of indirect financing.
Zhu also said that margin trading and securities lending and covered warrants were under active preparation. He is also optimistic about the launch of margin trading and securities lending within the year. As for covered warrants, he has no schedule about its launch. However, the SSE has made full preparation and is waiting for the approval of the authorities.
