China's Party Line Is Capital
China has issued a blueprint to overhaul its flagging capital markets, a move that is boosting the stock market in the short run and that could prove crucial to the country's financial overhaul in the long term.
Under a nine-point plan issued by the State Council, or cabinet, Chinese insurance companies and social-security funds will be allowed to expand their investments in the stock market. More securities companies will be able to issue stocks or bonds to raise badly needed funds. And China will revive a controversial plan to begin "steadily" selling into the market huge amounts of equity in publicly traded companies currently held by the state and not eligible for trading.
The markets, in the doldrums for the past three years even as China's economy has roared ahead, have bounced since news of the plan was unveiled Feb. 1. The real benefits of the plan -- if fully implemented -- would be long term: The blueprint affirms the tough-medicine approach that regulators have been taking lately, such as imposing stiff penalties for illegal activities, to clean up the market. It also charts new steps to further strengthen the market. Viable capital markets are crucial for the success of China's financial reforms, offering companies another channel for raising cash -- in addition to the bad-debt-laden banking sector -- and giving investors another destination to park their money.
CHANGE IN PLANS
China's nine-point guide to improving its stock market
o Deeply grasp the significance of developing capital markets
o Promote guiding principles for enforcing change, openness and stability of capital markets
o Perfect policies to improve the stability and development of capital markets, including improving the IPO approval system, increasing the amount of stock-market investments by insurance companies and social-security funds … and "steadily" resolving the problem of nontradable state-owned shares
o Establish a second board and improve China's bond and futures markets
o Perfect corporate governance of listed companies
o Build securities and futures companies into competent modern financial companies
o Strengthen supervision of capital markets, and encourage media supervision
o Prevent and control market risks and punish illegal activities
o Steadily open the market further to foreign investors
Source: China State Council via Xinhua News Agency
"This is great because it lays out a long-term plan" for reforming the stock market, says Gao Xiqing, a former high-level securities regulator. "It hits some of the right points, such as using market methods to solve market problems." Still, he added that the plan skirts other issues, such as what he views as the need to immediately set up a second board to allow smaller companies to raise funds on the capital market.
One result of the plan could be a flood of new funds into the market. Xu Hongyuan, research-department head for the State Information Center, a government-run think tank, estimates that 100 billion yuan ($12.1 billion) of fresh capital could enter the stock market this year from insurance companies, social-security funds and newly approved open-ended funds. That, he says, could "greatly change the balance of supply and demand, and boost the market." The main benefactors are likely to be blue-chip stocks, such as China Yangtze Power, a utility that is traded on the Shanghai market, and other concerns in the telecommunications, transport and port sectors, he and other industry analysts say.
Chen Jinquan, an analyst at Ping An Insurance, estimates that insurance companies could invest as much as 50 billion yuan directly in publicly traded companies in China. Chen Su, a former manager of China Life Insurance Co., says insurance companies are "eagerly awaiting" new guidelines that would allow such investments. Currently, they are allowed to invest 15% of their total assets in stocks, but only through funds, which generally don't offer attractive returns. As of October, insurance companies had invested slightly more than 5% of their total assets in stock funds.
More importantly, an increased number of institutional investors could bring greater stability to the market. Many small investors take a speculative approach to investment. Regulators hope these smaller investors "will follow the rational investment approach of institutional investors," says Mr. Xu of the State Information Center.
The reform plan also would tackle one of the biggest problems facing the stock market: the overhang of about $300 billion in nontradable shares, or about two-thirds of the total stock in publicly traded state companies. Currently, these shares remain in the hands of the government and other so-called legal persons, but uncertainty about how regulators eventually will deal with these shares has long overshadowed the market. Two years ago, Beijing quietly shelved a plan to sell massive amounts of state shares into the market after news of that project made share prices tumble.
A consultant to the China Securities Regulatory Commission, the country's securities watchdog, says the commission already has earmarked several companies to begin listing their state shares based on their net asset value, and the implementation of the plan could be "imminent." He says the commission still is negotiating details with the agency in charge of state assets, which favors setting higher prices for the shares than the commission wants.
Other industry experts are less optimistic, saying a sell-off of state shares might not occur this year because of differences of opinion between the two agencies. Yuan Gangming, a senior researcher at the Chinese Academy of Social Sciences, says that unless this issue is resolved, "the core problem of China's stock markets remains unresolved." Problems that plague China's stock markets include continued state control of publicly traded companies, corruption, poor corporate governance and a lack of transparency.
Other aspects of the reform program also will require cooperation among different agencies, a potential barrier to the plan's smooth implementation. "Unfortunately, the reforms within the power of the China Securities Regulatory Commission, such as re-regulating the [initial public offering] system, are of less importance and urgency than reforms that require cooperation between the commission and other departments," says Hu Ruyin, director of the Shanghai Stock Exchange's research center. "This will remain the biggest difficulty facing the reform."
For example, the securities-regulator commission must cooperate with the China Insurance Regulatory Commission, its insurance-sector counterpart, to draft guidelines before insurance companies can invest their premium assets directly in the stock market. Likewise, it will have to cooperate with the central bank to draft rules to allow banks to invest in the market.
Another potential problem: an excess of optimism, thanks to news of the reform plan. In the wake of the announcement, some shares surged, though they have been hit by profit-taking in recent sessions. Wednesday, the benchmark Shanghai composite index, which groups hard-currency Class B shares and yuan-denominated Class A shares, slid 0.8% to 1,677.76. (At the end of January, it was at 1,590.73.) The Shenzhen composite index rose 0.1% to 437.80. It had been at 404.63 at the end of January.
"If everyone is just clapping over the immediate interests they can gain from the new plan, new market bubbles will certainly appear," says Mr. Hu, a drafter of the plan. "That will ruin the efforts to fundamentally reform our capital markets."
资本市场改革计划广受欢迎
中国公布了一份大力改革资本市场的蓝图，此举短期内将对股票市场起到提振作用，长期而言，对中国的金融改革也将至关重要。
根据中国国务院(State Council)公布的发展资本市场的九条意见，中国将提高保险公司和社会保障基金投资股市的比例，允许更多证券公司发行股票或债券以筹集急需的资金。此外，中国还将重新启动曾引起争议的国有股减持计划，"稳步解决"国有股流通问题。
上述意见2月1日公布后，股市立即出现反弹。过去3年中，尽管中国经济增长迅猛，但中国的股票市场一直表现低迷。该计划如果全面实施，其影响将是长期性的，这是政府监管机构最近为整顿市场投下的又一剂猛药。这一计划还是政府进一步强化资本市场的新步骤。充满活力的资本市场对中国金融改革获得成功至关重要，企业可以由此获得新的筹资渠道，而个人投资者也将在坏帐缠身的银行系统之外为手头的资金找到又一出路。 原中国证券监管行业高层人士高西庆说，这是一项改革中国证券市场的长期计划，意义重大，它用市场的方法解决市场中存在的问题，切中了要害。但他也指出，计划也回避了一些问题，如二板市场等，高西庆认为有必要尽快设立这样一个满足中小企业融资需要的市场。
实施这一计划的结果之一可能是将有大量新资金流入市场。官方智囊机构国家信息中心(State Information Center)的研究部负责人徐宏源估计，今年将有来自保险公司、社会保障基金和新成立开放式基金的人民币1,000亿元（121亿美元）的资金进入股市。他认为这将极大地改善供需平衡，从而起到提振市场的作用。徐宏源和其他业内分析人士认为，从中受益的主要将是长江电力(China Yangtze Power)等蓝筹股以及电信、运输和港口等行业的股票。
平安保险(Ping An Insurance)的分析师陈锦泉估计，保险公司对上市公司的直接投资可能将高达500亿元。曾在中国人寿保险(China Life Insurance Co.)任经理的陈苏（音译）说，各保险公司正在急切等待允许它们直接投资股市的新规定颁布。目前中国只允许保险公司将其总资产的15%投资于股市，且只能通过基金间接投资，而基金的投资回报率总的说来并不吸引人。截至去年10月，保险公司在股票基金的投资仅占其总资产的5%多一点。
更为重要的是，机构投资者数量增多可以使股市具有更大的稳定性。许多小型投资者的投机性较大。国家信息中心的徐宏源说，监管机构希望小型投资者借鉴机构投资者的理性投资方式。
新的改革计划也将触及中国股市目前面临的最大问题之一：市值约3,000亿美元的非流通股问题，这些股票占上市公司总股本的三分之二左右。目前，这些股票仍掌握在政府和其他所谓法人手中，但监管机构最终将如何处理这些股票仍悬而未决，一直是笼罩在股市上空的阴影。两年前，中国政府曾计划在股市上大量出售国有股，消息一经公布，股市立刻暴跌，政府不得不暂时搁置了这项计划。 中国证券监督管理委员会(China Securities Regulatory Commission)的一位顾问说，证监会已挑选了几家公司，允许它们的国有股上市出售，售价为股票的资产净值，这项计划很快将会实施。他说，中国证监会仍在与国有资产管理部门商谈这一计划的细节，后者希望的国有股售价比证监会建议的要高。 其他业内专家则不这么乐观，他们认为，由于上述两家机构存在意见分歧，大规模出售国有股不大可能在今年进行。中国社会科学院(Chinese Academy of Social Sciences)高级研究员袁钢明说，除非这一问题得到解决，否则中国股市的核心问题仍将悬而不决。困扰中国股市的问题包括：上市公司仍然受到国家控制，腐败问题、公司治理不力以及缺乏透明度等。
这一改革计划其他方面内容的实施也需要政府不同部门的配合，而这一点有可能成为影响计划顺利实施的障碍。上海证交所(Shanghai Stock Exchange)研究中心主任、这次资本市场改革意见起草人之一胡汝银说，与在中国证监会内部实施的改革议题（如重新修订首次公开募股制度等）相比，与需要证监会和其他政府部门协调实施的改革议题更加重要和紧迫，这仍将是改革面临的最大困难。 例如，为解决于保险资金直接投资股市的问题，中国证监会必须与中国保监会(China Insurance Regulatory Commission)合作，制定出这方面的草案。同样，证监会在制定允许银行投资股市的规定时还需与中央银行合作。
另一个潜在问题是，这一改革计划的出台使市场出现了过分乐观的情绪。计划刚刚宣布，一些股票就大幅飙升，尽管后来几个交易日的获利回吐抹去了部分涨幅。周三，上证综合指数下跌了0.8%，降至1,677.76点。(该指数1月底时为1,590.73点)。深圳综合指数则上涨0.1%，升至437.80点。该指数1月底时为404.63点。
胡汝银说，如果所有人都期望从这一新计划中立刻获益，市场无疑将会出现新的泡沫。他说，这将使从根本上改革中国资本市场的努力付诸
