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Measures to boost financial markets

[ 2012-01-10 16:49]     字號 [] [] []  
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Financial markets will be developed and the securities industry opened further to foreign participants in a bid to diversify risk in the banking sector, a leading financial official said.

China should be "highly cautious" about systemic risk in the banking sector and needs to substantially boost the scale of direct financing, such as stocks, to diversify the risk, Guo Shuqing, chairman of the China Securities Regulatory Commission (CSRC), said.

The regulator plans to launch several new products, including high-yield corporate, municipal and government agency bonds, in order to boost direct financing. The regulator will also reduce administrative procedures regarding the issuing of bonds, he added.

Three of the world's top 10 banks, judged by assets, are Chinese. However, cash-strapped small businesses are still experiencing difficulty in raising capital.

Guo said at a regulator's annual work conference that "Some of the firms may be more suitable for stock or bond financing but they can't get sufficient financial support because direct financing remains small-scale."

"This structural problem can damage the economy seriously," he added.

The total assets of China's securities industry stood at 4.7 trillion yuan ($744 billion) by the end of 2011, according to the regulator. This accounts for only 3.9 percent of the total assets of the country's financial industry. The banking sector accounts for more than 90 percent.

Analysts said a vibrant bond market could help diversify risks and reduce over-reliance on the fast-expanding banking sector. But a healthy credit rating system and a mature credit culture are vital to expanding the bond market, they said.

Ivan Chung, a senior analyst at Moody's Investor Service, said that "The development of the bond market is a key part in reducing over-reliance on the banking system."

The regulator is also working to further open the securities market to foreign investors by raising the investment quota for Qualified Foreign Institutional Investors (QFII) in the A-share market.

Guo also noted that China needs to accelerate the development and opening of domestic market intermediaries and introduce advanced technology and personnel from developed markets.

Questions:

1. What country do three of the world's top 10 banks come from?

2. How much does the total assets of China's securities industry stand at?

3. How is the regulator working to open the securities market to foreign investors?

Answers:

1. China.

2. 4.7 trillion yuan.

3. By raising the investment quota for Qualified Foreign Institutional Investors in the A-share market.

(中國日報網英語點津 Rosy 編輯)

Measures to boost financial markets

About the broadcaster:

Measures to boost financial markets

Emily Cheng is an editor at China Daily. She was born in Sydney, Australia and graduated from the University of Sydney with a degree in Media, English Literature and Politics. She has worked in the media industry since starting university and this is the third time she has settled abroad - she interned with a magazine in Hong Kong 2007 and studied at the University of Leeds in 2009.

 
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