Uncertainty surrounds board launch

China is still waiting for the much-discussed launch of a growth enterprise board.

A senior official required local offices to prepare for it at an internal conference of China Securities Regulatory Commission (CSRC) in December, saying it could come "at any moment".

But this is hardly a new theme; as early as 2006 CSRC Chairman Shang Fulin said "the time is mature to launch growth enterprise board".

Premier Wen Jiabao told a press conference during the annual sessions of the National People's Congress and the Chinese People's Political Consultative Conference in March 2008 that regulators would choose a proper time to launch the growth enterprise board.

CSRC chairman said that they would try to launch the board in the first half of 2008. But worsening market conditions shelved the plan.

The growth enterprise board became a hot topic again in the fourth quarter of 2008 as small and medium-sized enterprises (SMEs) experienced tough times and many struggled to survive.

The CSRC would launch the growth enterprise board in time to help capital-thirsty SMEs, said Chairman Shang at a forum in Shenzhen on SME's financing problem, on Dec 1.

Qi Bin, director of the research center with CSRC, said in a press release on Dec 13 that regulators would speed up the launch.

The State Council, China's cabinet, released 30 measures in December to boost the financial sector, including improving the Shenzhen SMEs board, launching the growth enterprise board and building a multi-level capital market system.

The "at any moment" comment was released on Dec 29.

The promised launch will come eventually, but it's hard to say when.

Timing the launch perfectly is hard. The authorities have to be cautious with a sluggish main board. No one can tell what impact the growth enterprise board will have on the main board.

But uncertainty on the exact launching time has negative effects.

Continual announcements from decision-makers cause fluctuations in the stock market and the credibility of management may be undermined.

The decision-makers should make a specific timetable for the growth enterprise board as early as possible, as well as for index futures, margin trading and short selling.

Pi Haizhou, financial freelancer www.cnstock.com

(China Daily 01/19/2009 page2)