BEIJING, Nov. 16 (Xinhua) -- The newly-established Beijing Stock Exchange (BSE) started trading on Monday, marking a key step in the reform and development of China's capital market.
Among the first 81 companies listed on the new bourse, ten were newly approved and 71 were transferred from the selected tier of China's National Equities Exchange and Quotations, also known as the "new third board."
It is learned that a rally in shares of ten firms that debuted on the new exchange triggered temporary trading halts in each of the new share offerings, with an average surge of 199.8 percent at the close of the first trading day.
At the launching ceremony, Yi Huiman, chairman of the China Securities Regulatory Commission, has hailed the launch of BSE as "landmark in China's capital market reform and development."
Since the China Securities Regulatory Commission (CSRC) released the overall plan for comprehensively deepening capital market reform in September 2019, China's capital markets have seen many new changes.
Experts pointed out that the deeper reform across the board effectively upgrades market functions, optimizes market ecology, improves market expectations, and unleashes market vitality, presenting brand-new reform prospects.
In future, China will continue to follow the market-oriented, law-based, and internationalized direction, speed up establishing a more mature and well-defined basic institutional system of capital markets, and raise the appeal and international competitiveness of capital markets, according to experts.
-- Market-oriented reform boosting market vitality
The comprehensively deepening reform greatly improves the functions of the capital markets. With the progress of the reform, the increasingly improved capital markets are speeding up releasing the dividends of reform and unleashing new vitality.
The reform of the registration-based IPO system is the key project in this round of comprehensively deepening of the reform on the capital markets. The Science and Technology Innovation Board (STIB) has withstood the market test and maintained steady operation over the past two years since its opening. By the end of October 2021, 352 enterprises had been listed on the STIB, with a total IPO financing of 439.9 billion yuan.
In the new round of capital market reform, the STIB plays the role of 'test field', said Zhang Lei, member of executive committee of Huatai United Securities.
The institutional innovation of the STIB has delivered good results, Zhang noted, adding that the practice, fully drawn on in the ChiNext reform and the pilot of the registration-based IPO system, has been further tested in the stock market.
The improvement of the basic system for the capital markets is the general goal of this round of reform on the capital market. The opinions for further improving the quality of listed companies released by the State Council will further deepen the reform of the basic systems, and improve the quality of listed companies.
"Since 2019, 76 companies have withdrawn from the market through multiple channels, of which 42 ones were forced to delist, three times of that in the past ten years, gearing up formation of the normal delisting practice; new rules on refinancing have been introduced, restrictions on reducing holdings have been moderately eased, and rapid review of small acquisitions and reorganizations has been carried out; governance and information disclosure rules for listed companies have been revised for standard operation of listed companies," said Zhao Xijun, co-president of China Capital Market Research Institute, Renmin University of China, over the past two years, the listed companies have presented new looks in quality improvement.
To streamline administration is essential for market-oriented reform.
It is learned that the CSRC has canceled and adjusted more than ten administrative permits, and canceled around 26 percent of matters of record; all government services have been accessible online at a faster pace; the government has delegated power, strengthened regulation, enhanced ongoing and ex-post oversight, and avoided leaving the market entirely to its own decisions.
--Faster internationalization
The recent two years have seen the wider opening of capital markets, continuous inflow of foreign capital, and faster internationalization.
Capital markets have made steady progress in the opening-up of markets, industries and products. At the beginning of 2020, restrictions on foreign ownership in the securities, funds, and futures industry were canceled, and unbiased treatment was fully implemented in the scope of business.
At present, more than ten foreign-controlled or wholly-owned institutions, including JP Morgan and Goldman Sachs Gao Hua, have been approved. A-shares have been included in MSCI, FTSE Russell, S&P Dow Jones and other internationally renowned indexes, and their inclusion ratio has gradually increased.
In recent years, foreign capital has been flown into A-shares. By the end of October, the value of foreign-owned A-shares was estimated at about 3.7 trillion yuan, accounting for 4.27 percent of total market value.
"The high-level opening up of the capital markets is taking shape faster. A series of opening-up measures have been introduced, showing China's unchanged determination in opening its capital markets. In the future, China's capital markets will open wider to align with international practice," said Dong Dengxin, Director of the Finance and Securities Research Institute at Wuhan University of Science and Technology.
While promoting the entry of foreign capital into the market, regulators are also making efforts to remove institutional barriers and increase the "lasting appeal" of domestic institutions. For example, Chinese regulators have optimized the long-term incentive and restraint mechanism for public offering funds, and strengthened equity incentives and income deferral for employees. Since 2019, the share of professional institutional investors in the market value has increased from 17.7 percent to 23.1 percent.
--Further reforms under way
Driven by reforms, China's capital markets have entered into a new stage of fast development. In the future, reform will still serve as the inexhaustible driving force for capital markets to get more mature.
The CSRC is quickening the pace to shore up weak links in the multi-tiered capital markets, and construct the multi-tiered equity market system with complementary functions and close connections. In the stock market, the CSRC has streamlined the board structure, coordinated and improved the positioning of different boards, set up the STIB, reformed the ChiNext, merged the main board and small and medium-sized enterprises board of the Shenzhen Stock Exchange, deepened the reform of the New Third Board, and established the transfer mechanism between different boards. Furthermore, it has set up the Beijing Stock Exchange, and formed amulti-tiered market system with staggered development, complementary functions and close connections.
In the bond market, the registration system has been fully adopted in the public issuance of corporate bonds. The first batch of nine public REITs pilot infrastructure products on June 21 raised a total of 31.4 billion yuan. In terms of futures, the stock index option of SHSZ300 was implemented in December 2019, and Guangzhou Futures Exchange was established this January.
The 14th Five-year Plan has charted a course for the development of the capital markets that will face higher requirements in its high-quality development. "Looking ahead, we must further deepen our understanding of the development rules of the capital markets, respect the market initiative, adhere to the rule of law, learn from international best practices, and constantly push forward the comprehensive deepening of the reform on the capital markets,"said Yi Huiman, Chairman of the CSRC.(Edited by Yang Yifan with Xinhua Silk Road, yangyifan@xinhua.org)
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