The performance of China's stock market may be affected by government policies on five aspects, market observers said Monday.

The policy on the management of state-owned assets is deemed asa major factor contributing to the stock market this year.

The performance of the stock market in 2003 shows a big impact of the measures for property right management in listed companies and large companies on the asset reorganization among enterprises.With the deepening of the reform on the state-owned assets management and supervision system in the new year, relevant policies are expected to affect the operation of the stock market to some extent.

To set up the second board is viewed as an essential factor that will have an impetus to the development of the stock market in 2004.

The Chinese authorities have decided to promote venture investment and build the second board market, which encourages efforts to establish a multi-layer capital market system, improve the structure of the capital market, and enrich products at the capital market.

The policy on initial public offering (IPO) and the reform of the IPO verification commission system and guarantee system promoted by the national securities watchdog, is expected to have a significant influence on the issue of new stocks in 2004. The new policy, made public last month, will also help guarantee the qualifications of listed companies at the root.

Assets management by securities firms will open a new channel for more funds to flow into the stock market and will be conduciveto increasing institutional investors' economic capacity.

The draft amendment to the securities law is expected to be submitted for examination and approval to the nation's top law-making body in April this year. The law, which was put into effectin 1999, contains some rules that are no longer compatible to the development of the stock market, and a revised law will boost the development of the stock market.

(Xinhua News Agency  January 27, 2004)