Shanghai Stock Exchange: Symposium On "Value Investing, Construction Of Blue Chip Market" Held

To promote the concept of value investing, push forward the practice of value investing and boost the construction of the blue chip market, the Shanghai Stock Exchange (SSE) held the symposium on "value investing and construction of blue chip market" yesterday. Presided over by SSE Vice President Huang Hongyuan, the symposium saw the participation of more than 30 representatives from securities companies and fund companies.

Huang said in his welcoming speech that the SSE had long been committed to the construction of the blue chip market, in an effort to provide the value-oriented investors with a wide range of products and services. The remarks made recently by Chairman Guo Shuqing of the China Securities Regulatory Commission (CSRC) that the blue chips with CSI 300 Index shares as the representatives are of rarely-seen value for investment posed new requirements for value investing and the construction of the blue chip market. Therefore, the SSE will be active in soliciting comments and suggestions and speed up the construction of the blue chip market, serving the development of the real economy.

When addressing the symposium, the person-in-charge of the CSRC Investor Protection Bureau said that the securities companies and fund companies should play the leading role in value investing. First of all, the CSI 300 Index companies account for 65% of the total market value, 74% of the total business income and 84% of the total net profit. The data show that the blue-chip shares are the main constituents of the market and of substantial value on the stock market. The securities companies and fund companies should establish the concept of long-term, rational, and value investment and play a leading role in the whole industry as the "main force" at all levels, constantly improving the initiative and capacity in serving the investors. Second, as the systems such as new share issuance, dividends and delisting are being reformed and improved, the measures for developing the bond markets, guiding the long-term funds into the market, constructing the OTC market and the management systems of investors appropriateness are being researched and promoted and the public are developing increasing demands for wealth management, the securities companies and fund companies should seize the opportunities, take the initiative to explore and innovate without restraints. Third, on the one hand, China's stock market boasts a huge number of investors demanding better service and protection; on the other hand, the group of new investors is on constant rise. In the face of the great potential of the group of new investors, the companies should make due contributions to the formation of the sound investment culture and the establishment of investment philosophy by giving play to their professional advantages and spirits.

SSE President Zhang Yujun concluded that appropriate investment choices are essential for the promotion of value investing, inevitably resulting in the demands for strengthening the construction of the blue chip market. The experiences around the world show that the blue chip market building is a long-term development process and the blue chips are scarce resources on all markets. The blue-chip companies among thousands of listed companies in the U.S. market, for example, are the constituents of Standard & Poor's 500 index, which are the pillars of the whole real economy and reflect the basic characteristics and development directions of the national economy. Over the past decade, the SSE, by adhering to the concept of "building a world-class Exchange, constructing the blue-chip market and serving the development of national economy", has initially formed the blue-chip market with the SSE 180 Index constituent stocks as the representatives.

Over the years, some small and medium-sized investments have run counter to the concepts of the rational investment and value investment, which is epitomized by "speculation on newly issued shares, small-cap stocks and bad-performance stocks and short-term investment". From the perspective of value investment, these investments are extremely irrational. Currently the market has sustained about 300 new listed companies every year with rich resources of listed SMEs. With the raising of the threshold for mergers and acquisitions, the hope for an unexpected and thorough change of the underperformance shares has become slimmer. The transaction costs of frequent trading significantly affect investors' earnings. The SSE will further strengthen the market supervision and focus on curbing illegal acts such as illegally speculating on newly issued shares through the measures of "temporary suspension of trading", "public condemning", "restricted transactions" and "applying for investigations". Meanwhile, the SSE has required member companies to enhance the classification regulation of clients and make efforts in risk warning.

Zhang stressed that, in order to optimize the market environment, promote the institutional construction and advance the rational investment, the SSE would take measures on the following six aspects. Firstly, it will improve the market services for more excellent enterprises to go public and further enrich the blue-chip stock market for the increase in the market value and the interest of the enterprises. Secondly, it will keep pushing forward the education and services for the investors and launch various activities for publicizing the concept of value investment, such as the activity of "Acquainting Investors with SSE 180 Index" to be held in the near term. Thirdly, it will adopt several measures to upgrade the corporate governance of the listed companies. For instance, it will reinforce the behavioral norms for the board of directors, the board of supervisors and the management, enhance the transparency of the company information, formulate more strict requirements for delisting, and perfect the procedures and requirements for merger and acquisition. Fourthly, it will make more efforts on the innovation of blue-chip products, the promotion of more products related to SSE Sector ETF and SSE Thematic ETF as well as the exploration of ETF Option and Individual Stock Option. Fifthly, it will create favorable conditions to attract into the securities market the pension and the enterprise annuity and other long-term capital whose nature determines that the blue-chip shares will be their first choice for the investment targets. Sixthly, with a view to laying a solid foundation for the rational and value investment, it will go all out for the reform on various tasks, such as the reform on the new share issuance system, the dividend distribution system, the investor suitability system, the construction of the over-the-counter market, high-return corporate bonds, etc.

At the meeting, the attendees swapped their views on the topics like the long-term capital into the market and the trend of value investment, the improvement of market environment and promotion of value investment as well as the development of multi-tier blue-chip markets and the satisfaction of value-oriented investors' demands. They reached a consensus that the guidance to investors for their investment in blue-chip shares would be good to improve the pricing efficiency on the capital market and the resources allocation efficiency as well as the abilities of the capital market to serve the real economy, which would be of great significance to promote the sound and sustainable development of the capital market.