By Wang Lan (Shanghai Start)
Updated: 2007-09-07 06:23

Shang Fulin, chairman of China Securities Regulatory Commission (CSRC), said yesterday preparatory work on the regulatory and technical framework for the financial futures market was largely completed and trading in the first product, CSI300 index futures, would be launched as soon as possible.

"China's capital markets have entered into a high growth period, which calls for further product innovation to maintain the momentum in the longer term," Shang said at the Inaugural Annual Meeting of the New Champions in Dalian.

Shang also highlighted that more efforts would be made to accelerate the development of Chinese markets for financial derivatives and bonds.

"We should step up our efforts to provide new financing channels for more enterprises," Shang said. "Along with the proposed introduction of index futures and corporate bonds, many more financial products should be also developed to broaden the scope of the capital market."

Fang Xinghai, deputy director-general of the financial services office of the Shanghai municipal government, proposed a mechanism to enable the short-selling of selected stocks on the Shanghai Stock Exchange to pave the way for index futures trading.

"Prior to the debut of the CSI300 index futures, it may be desirable to introduce the short-selling mechanism to enhance investors' understanding that could, in turn, promote the smooth operation of the prospective financial futures market ."

Fang also noted that further opening of the mainland's capital market would help strengthen the competitive edge of domestic financial institutions and ensure orderly and sustainable development.

"A competitive domestic capital market, with greater foreign investors' participation, would help enhance the knowledge and capability of domestic institutional investors," Fang said.

Statistics compiled by CSRC show that by the end of August, 1,504 companies had been listed on the mainland stock market, with the aggregate market value of about 2.3 trillion yuan.

The investor structure of the mainland's capital market had also matured, indicated by the increasing share of institutional investors in the past two years. The big-capped stocks, represented by Industrial and Commercial Bank of China (ICBC) and Bank of China (BOC) in the banking sector, have taken up an increasing portion in the mainland's total market value.

The combined market value of the top 50 listed companies in the nation's two bourses in 2007 accounted for 60 percent of the total market value, up 20 percent from 2004.

Small and medium sized enterprises (SMEs) also performed well in 2007, with the market value of 164 listed SMEs notching up 825.4 billion yuan.

(Shanghai Start 09/07/2007 page1)