Business / Policy Watch

China to roll out new capital market measures

( Updated: 2012-11-14 09:36

In order to combat the sluggishness in China's capital markets, the CSRC has rolled out a series of innovative reforms. Under these new policies, regulation frameworks of China's stocks, futures and bonds markets have shown improvements.

The CSRC proposed continued support for eligible companies that want to list on China's main boards, encouraging the ChiNext trading niche, and developing a board for small and medium-sized enterprises. It also called for initiatives that encourage municipalities to raise funds through bond sales.

With all the pending changes, experts say China's capital market is contributing more to China's economic development.

"The economy is no longer at the mercy of the banking lending. A lot of people may have not noticed that a new concept has emerged, which is called the "total social financing". That concept has replaced the "total bank lending", because there are more financing avenues and vehicles for companies, enterprises and individuals. It's one of the aspects of the progress," Xu Sitao, chief representative for China of The Economist Group, said.

The CSRC is also preparing for the launch of crude-oil futures and treasury futures, to diversify the financial products in the mainland capital market and to boost the derivatives transactions.

It is also planning to accelerate the opening-up of the capital account to encourage overseas investors to participate in the mainland futures and bond markets.

China's market regulator had pledged to speed up approvals for quotas for QFII. It's the only way to let foreign investors to get access into China's domestic market.

And many foreign institutional investors and banks are expecting to participate more in China's domestic capital market and have a growing share in China's financial market.

"Foreign banks here, China is a growing big market. At this stage, shares of foreign banks are relatively limited," Zhu Haibin, chief China economist of JP Morgan (China), said.

Meanwhile, since the start of this year, the CSRC has rolled out a string of policies to facilitate bond sales, including simplifying the bond application process, paving the way for a wider diversity of debt products and allowing low-credit firms to extend bonds. Analysts say this will make local companies more inclined to tap the bond market for financing.

In the latter part of last year, China's securities regulator has kick-started its reform engine in the capital market to change the country's market landscape.

Since October last year, a slew of proposed policy adjustments, ranging from growth-board delisting rules to a green light for small bank stock flotations, were rolled out by the China Securities Regulatory Commission. The regulator also plans to speed up the formation of a multi-level capital market system and provide more differentiated financial services.

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