The Shanghai Stock Exchange (SSE) yesterday released its 2007 development plan, which highlights nine points for building a world-class stock market with an efficient trading system and product diversity.

 

According to the plan, the SSE will step up efforts to attract more mainland companies that have already listed on the Hong Kong bourse to seek a dual listing in Shanghai. In addition, it will try to attract more initial public offerings by leading state-owned companies to boost market size.

 

The SSE said it would create a favorable market environment to speed up the listing process and to encourage mergers and acquisitions among listed companies.

 

With the Shanghai Composite Index the leading market indicator rising more than 130 percent in 2006, the SSE is one of the world's fastest growing stock markets. Most of the mainland's larger enterprises, such as the Industrial and Commercial Bank of China, Bank of China, Baosteel and China Unicom, are already listed in Shanghai.

 

The combined market value of the 10 largest Shanghai listed companies account for more than 50 percent of the total market value.

 

"The SSE has substantially increased its investment value and market status in the world, as it strives for world-class stock market status," said SSE Chairman Geng Liang.

 

The SSE's goal for 2007 is to structure a more diversified market with the balanced development of stocks, bonds and a number of financial derivatives. Covered warrants and other structural products derived from blue-chips stocks are expected to be launched in 2007 to increase market liquidity.

 

"We have made full preparation for the launch of covered warrants, but are still waiting for approval from the regulatory authorities," said the SSE's manager of financial derivatives Chen Hao.

 

The bond market will be an important area for the SSE to develop in 2007, and particularly the trade in state bonds, corporate bonds and asset securitization products. The SSE will develop an electronic system for bond trading this year.

 

The stock trading system will also be updated early this year to include more functions. The new system is expected to be put on trial during the non-trading period in April.

 

This is a very important year for the SSE, which is faced with unprecedented opportunities and challenges, a spokesman from the SSE said.

 

The share reform was almost completed in 2006, resulting in a more rational market. By the end of 2006, there were a total of 1,269 companies that underwent the share reform, accounting for 94 percent of the total. This year, the SSE will help the remaining companies undergo the reform process.

 

Market sources agree that there is a lot of work left. Despite the tremendous progress made in recent years, the SSE is still behind other mature stock markets in the world in terms of efficiency and product diversity. So, the SSE is trying to significantly narrow the gap in 2007.

 

(China Daily March 6, 2007)