Foreign companies will soon be included on China's domestic A-share listings as part of the country's commitment to opening the capital market to foreign investors with its pending entry into the World Trade Organization, a senior securities regulator said.
"The listing in China of qualified companies with foreign investment will help upgrade the structure of the stock market," said Zhou Xiaochuan, chairman of the China Securities Regulatory Commission, while attending an international seminar on WTO and the stock market Tuesday in Beijing.
Foreign investors will also be given wider access to trading on the domestic bourses through the programme of registered qualified foreign institutional investors and the setting up of joint venture fund management firms, he said.
Experts said more participation of foreign investment in China's stock market would eventually ignite trading and increase the market value of stocks.
It will also channel more foreign capital to fund-thirsty domestic firms and urge them to increase the transparency of their operations.
China has initiated a raft of reforms since early this year to boost market-oriented practices in the stock market and attract more people to put part of their savings into stocks.
The reforms include the expected launch of the NASDAQ-style second board and the globally popular open-ended fund, as well as efforts to let pension and insurance funds invest in the stock market.
Zhou said the regulatory commission would take unconventional and creative measures to facilitate the debut of the open-ended fund as early as possible.
The government is also working hard to clinch a feasible mode by which the mammoth pension fund it has initiated can trade stocks to increase in value.
Other new financial tools to be unveiled include the long-awaited futures index.
However, the present system to regulate the share markets stands out as fragile in the face of the shock wave and financial risks that will come when foreign competition enters the market.
"One of our focuses now is the building of a comprehensive regulation framework and the strengthening of supervision," said Zhou.
"Risk control and innovation should go together," he said.
By the end of September, China's decade-old securities market had more than 1,000 listed companies, with a total market value of 410 billion yuan (US$49 billion).
(China Daily 10/25/2000)