Date
21 October 2017
General Economy Images Of China

The Big Picture: INVESTOR PROTECTION

China will strengthen the investor protection measures in a bid to ensure a transparent and fair capital market in the country, the State Council said in a statement on Friday.

The China Securities Regulatory Commission (CSRC) will launch a clear categorization system to classify all the investment products so that small and mid-sized investors can choose the right products based on their risk appetite and acceptability, the cabinet said. Securities and futures regulators should continue to improve investor education, it said.

Listed companies must improve corporate governance and strive to provide good returns to investors, the statement said. Companies will enjoy more regulatory support if they can constantly deliver dividends in cash or shares to investors. Firms that fail to fulfill their promises on dividend payments will not be allowed to undertake refinancing activities. 

Stock exchanges should enhance information disclosure standards further and require listed entities to hold regulator meetings with investors. Listed companies should allow shareholders to vote online while boosting the transparency at investor meetings, said the statement which was posted on the government website.

The CSRC will, meanwhile, push forward the establishment of arbitration and compensation mechanisms to resolve conflicts between listed firms and investors, the statement said.

The government’s latest initiative marks a good effort toward protecting the interests of investors. However, it may take many years for authorities to realize their goals, observers say. China’s stock markets are not lacking in regulations, but the power to implement and execute the rules, they say.

Over the past decades, the CSRC was acting as a gatekeeper in approving listing applications but it did little in post-IPO monitoring. As a result, many listing candidates tried to cover their debts and risks and some of them even provided false financial information to gain listing status. Amid such practices, the secondary market has performed poorly and was unable to retain institutional investors.

In all, more detailed rules about post-IPO monitoring should be unveiled if regulators really want to boost investor sentiment in the A-share markets, observers say.

SSE finds four brokerages in improper conduct

The Shanghai Stock Exchange has concluded that four brokerages have failed to perform their duties in a professional manner, warranting some self-discipline measures, the China Securities Journal reported Monday. The brokerages were said to have undertaken sales orders placed by qualified foreign institutional investor (QFII) clients at prices that were in variance with market prices on December 20, causing big swings in stock prices. To preserve market order, SSE will conduct further investigations and will implement self-discipline supervision on the brokerages. The four firms are UBS Securities, Guotai Junan Securities, Orient Securities and China International Capital Corp.

Sichuan official under investigation

Li Chongxi {李崇禧}, chairman of the Sichuan provincial committee of the People’s Political Consultative Conference, is under investigation for suspected serious violations of law and discipline, according to a statement posted Sunday on the website of the Central Commission for Discipline Inspection and the Ministry of Supervision. Li was elected chairman in January this year.

– Contact HKEJ at [email protected]

JP/MY/RC

 

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