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Distinguished guests, ladies and gentlemen,
Since the beginning of this year, following the policy line of further deepening reforms and promoting industrial upgrading set by the central government, we have witnessed positive changes. The endogenous power of economic growth has been strengthened, while market expectation and public confidence in accelerating economic development pattern transformation has gradually been formed. We have come to a new starting point where advancing financial reform innovations and supporting the real economy for a new leap becomes the focal issue, gaining wide attention and consideration from all social sectors.
SZSE is committed to building a multi-tiered capital market and serving high-tech SMEs. It is our conviction that, in accordance with the Guiding Opinions on Financial Support for Economic Restructuring and Industrial Upgrading, a tailor-made multi-tiered capital market is bound to play an irreplaceable role in serving the real economy in a higher level and broader range.
For example, the ChiNext Market has played an increasingly important role in boosting entrepreneurship and innovations. Since its inception, it has been dedicated to implementing innovation-driven strategies, cultivating emerging industries and fostering new competitive edges. In the next phase, we will align the systemic design of ChiNext with the nature and industrial trends of innovative and growth enterprises, in terms of market entry, refinancing, equity incentives. That will enable ChiNext to become the engine of the innovation-oriented capital allocation chain and guide more capital flows towards the innovative sectors. It will also cultivate an institutional environment and social climate inspiring and endorsing innovations, as well as create the solid social foundation and endogenous power conducive to the innovation-driven development.
In accelerating structural adjustment, a new wave of M&As have arrived as a series of measures gradually put in place to promote industry consolidation and resolve excessive capacity. The capital market is a highly efficient platform for market-driven M&As. We have observed that, as the CSRC recently made systematic deployment to expedite M&A activities, the market also pays great attention to M&A opportunities, and various M&A funds innovations adapting to M&A financing have sped up. To welcome this wave of M&As with deep industrial background, we have started preparations from two aspects. On one hand, along with daily supervision, we strengthen inspection of insider trading in M&A cases, enhance clue-discovering capabilities and perfect the regulatory measures of relative intermediaries, especially rating agencies with heavy impact on M&A pricing. On the other hand, revolving around the goal of adjusting industrial structure, we offer targeted guidance and services to companies to resolve their widespread concerns such as how to strengthen communication and cooperation within the industry, manage investor relationship during M&As, prevent insider trading and properly handle the corporate governance and equity structure. All this will bring capital market’s M&A function into full play.
In supporting small- and micro-sized enterprises, development in OTC markets have taken pace, filling the gaps and creating conditions to bridge the local economy. This helps improve the capital forming system from a micro perspective and construct the early-stage docking mechanism between science and finance. High cost resulted from severe information asymmetry explains the financing difficulties for small- and micro- businesses. The OTC markets, in essence, build a credibility information platform and solve the conundrum of information asymmetry for small- and micro- enterprises, by smoothing the information flow and converging credibility information of enterprises from all aspects. We learned from our survey that some regional equity exchanges have already made endeavors in this regard. In addition, more small companies get to enjoy the service of professional intermediaries and the capital and constraint mechanism brought about by mature professional investors, which in turn improves its accounting and governance. It will also help foster the missing equity culture and solidify the foundation for the sound development of the multi-tiered capital market. Because of this, we have taken an active part in building the regional equity exchanges. Thus far, 5 equity exchanges have been established with 2,835 quoted companies and RMB 3.03 billion of equity financing. The debenture financing instruments including equity-pledged repos and private placement bonds have raised a total of RMB 22.74 billion.
As of revitalizing stock assets, we strive to improve the innovation capability of asset backed securitization, expand the scope of underlying assets and explore diversified project models based on experience accumulated from the past pilot projects. Given the restriction of total credit scale, asset backed securitization must optimize credit structure and revitalize stock assets. Currently, nearly 26 asset backed securitization projects are under discussion and argumentation in SZSE. Besides the pre-existing underlying assets such as sewage treatment, highway tolls, theme park tickers, a new array of underlying assets have been added, including bank loans, lease assets, commercial property rent and new energy power supply revenue. Specially, the 2 Alibaba SAMP which just got listed on SZSE last month marked the first attempt of small-loan asset backed securitization. This product successfully revitalized Ali Finance’s RMB 1 billion worth of stock assets, therefore expanded its business. Next, we will continue to modify our trading mechanism, risk management and investor suitability program to pave way for the development of asset backed securitization.
China is an emerging economy as well as the world’s second largest economy. Such a fact determines the diversity and complexity of our economy. Labor-intensive, technology-intensive and capital-intensive industries have their respective advantages, but also face the pressure of transforming from “extensive” to “intensive” models and moving from “low-end” to “high-end” of the industrial chain. Thus, the term of economic transformation and upgrading contains rich implications in our country, including cultivation of emerging industries, transformation of traditional industries, and support for SMEs, which have vital bearings on the nation's economy and people's livelihood. In order to achieve economic transformation and upgrading in an all-round way, the multi-tiered capital market should grow in both market width and depth. After all these years’ exploration into the abovementioned issues, we expect to achieve breakthroughs this year. I believe that more innovations in service mechanism, tools and methodologies will spring up as the economic transformation and upgrading continuously deepens.
Wuhan is a traditional industrial base as well as a key city of science and education in central China. We noted that the National Development and Reform Commission (NDRC) and the Ministry of Transportation are working on the draft of Guiding Opinions on Forging New Economic Engine along the Yangtze River. It is actually the first time for administrative authorities to invigorate the Yangtze River Economic Belt, also an inevitable result of economic transformation and upgrading to tap growth potential of the inland. Owing to its strategic position in the Yangtzi River economic belt, Wuhan is poised to shoulder the arduous task of backing up the rise of the midland. SZSE and Wuhan have maintained close cooperation over the years, especially in recent years when the Donghu National Independent Innovation Exemplary Zone has supplied large numbers of listed companies for the SME Board and the ChiNext Market. It has fostered a reservoir of listing resources and accumulated rich experience in taking advantage of the multi-tiered capital market to expedite regional economic growth. Faced with new circumstances, we are committed to establishing a closer, more in-depth and comprehensive partnership between the multi-tiered capital market and Wuhan. We will provide support and guidance for regional financial reforms and innovations in Wuhan, thus weave an all-in-one financial service link to serve the real economy.
Thank you!
