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At the "Symposium on Development of Corporate Bonds Market of ASEAN+3 (Southeast Asian Nations, China, Japan and South Korea)" held yesterday, President Zhu Congjiu of the Shanghai Stock Exchange (SSE) pointed out in his keynote speech "Improvement of Corporate Bonds Infrastructure" that the corporate bonds market should attract more professional institutional investors in addition to commercial banks, with an aim to expand the size of investors and thus form a unique group of "Investors on Corporate Bonds Market".
"After the Asian financial crisis, we realized that to diversify risks and market activities, the sizes of both the bonds market and the investors should be expanded, and the development of corporate bonds in China also requires a much bigger investor group," said Zhu at the symposium.
He pointed out that to construct the corporate bonds market into a deep one includes three aspects. Firstly, a healthy base market should be established. Secondly, listed companies should possess good skills in financial management. Thirdly, the size of investors should be maximized. Efforts should be made to attract more professional institutional investors on the market.
Zhu also stressed the importance of intermediary service agencies including securities dealers and rating companies in the development of the corporate bonds market. In China, traditionally, borrowing and lending are provided with guarantee, and financial tools based on credit are not very applicable. Therefore, the development of the rating institutes in China is relatively week and should be reinforced as soon as possible. In terms of pricing, underwriters and dealers should help price the new financial tools at the early development stage of the market.
