Af­ter a tur­bu­lent year, A-shares set to shine

China Daily (Hong Kong) - - 2016-17: REVIEW & PREVIEW - Li Xiang RE­PORTER’S LOG

Afriend of mine told me that he hasn’t checked his stock ac­count for so long that he nearly for­got his ac­count pass­word. He said he hadn’t given up on the mar­ket, but sim­ply wanted to play it as a long-term game.

The roller­coaster ride of the stock mar­ket since the sum­mer of last year has made many re­tail in­vestors grow tired of ob­ses­sively check­ing stock prices and con­stantly wor­ry­ing about whether they would miss any op­por­tu­nity to make prof­its.

Many of them learned the les­son the hard way, af­ter the dra­matic mar­ket rout in 2015 that wiped out nearly 40 per­cent of the mar­ket value. They came to re­al­ize how dan­ger­ous it was to buy and sell on ru­mors and spec­u­la­tive in­stinct. They un­der­stood how risky it was to use lever­age to trade stocks.

So did the reg­u­la­tors. In 2016, the mar­ket had a new se­cu­ri­ties chief, Liu Shiyu, who vowed to crack down on il­le­gal mar­ket ac­tiv­i­ties, im­prove mar­ket trans­parency and to en­sure fair play in the mar­ket.

We have seen a greater num­ber of in­ves­ti­ga­tions and pun­ish­ments for mar­ket ma­nip­u­la­tion and in­sider trad­ing this year. There has also been stronger en­force­ment of proper in­for­ma­tion dis­clo­sure rules by listed com­pa­nies, to en­sure ev­ery in­vestor ob­tains the nec­es­sary in­for­ma­tion on an equal ba­sis.

In the past year, the Chi­nese stock mar­ket made progress to­ward be­com­ing more in­ter­na­tional and more ac­ces­si­ble to over­seas in­vestors, with the long-awaited launch of the Shen­zhen-Hong Kong Stock Con­nect in De­cem­ber.

But there were also dis­ap­point­ments. The A-shares were once again re­jected by MSCI Inc for in­clu­sion in one of its key in­ter­na­tional bench­mark in­dexes. Do­mes­tic re­forms to­ward a reg­is­tra­tion-based share sale scheme and the long-awaited amend­ment of the coun­try’s Se­cu­ri­ties Law were de­layed due to the mar­ket tur­bu­lence.

The lat­est wave of spec­u­la­tive stock trad­ing and the ag­gres­sive stake bid­ding by in­surance funds have also led to ris­ing mar­ket volatil­ity and caused deeper con­cerns about what kind of role in­sti­tu­tional in­vestors should play.

None­the­less, as Chi­nese in­vestors be­come more so­phis­ti­cated, the ex­pec­ta­tion is that they will en­sure the mar­ket in­fra­struc­ture is fur­ther im­proved with greater trans­parency and less il­le­gal and spec­u­la­tive be­hav­ior. There is also hope for the rule of law to play a greater role in the mar­ket, which will be the ul­ti­mate source of con­fi­dence for in­vestors in the com­ing year.

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