Shanghai focuses on blue chips, investor confidence

Shanghai Stock Exchange's New Year's resolution will include exploring setting up a high-yield blue-chip sector, strengthening protection of small investors as well as ensuring and safeguarding fairness and transparency.

The benchmark Shanghai Composite Index dropped by 6.75 percent in 2013.

This performance left staff members of the SSE "feeling uneasy and they have to think seriously" about the result, China Securities Journal quoted the exchange as saying on Tuesday.

The SSE said it will diversify products to meet investor demand, improve the structure and quality of listed companies, elevate blue-chip shares, and continue pushing for better information disclosure.

"We could not predict market trends in 2014, but we believe stronger protection of investors will help to improve the user experience and attract more investors," a top official of the exchange was quoted as saying.

The SSE chairman Gui Minjie had said earlier that the bourse will prepare comprehensive reforms on the transaction process, including offers, listing, refunding and delisting.

Information disclosure must be more efficient if the SSE blue-chip market is to grow into a key platform for multilevel capital and resource allocation.

The bourse started simulated trading in equity options last week, part of a drive by regulators to expand investor risk-hedging options.

Earlier reports said they might be formally traded this April, becoming the second securities derivatives after China introduced stock index futures trading in 2008.

Blue chips in China have suffered from depressed valuations, partly due to doubts over their earning potential.

By the end of 2012, the average price-earnings ratio for the SSE, where most of China's blue chip companies are listed, stood at only 11 times 2012 earnings. On the Shenzhen exchange the average ratio is 28.