Policy Market Big Talk: Where is the Chinese Stock Market Heading?

Author: Shui Pi
Publisher:
Publish Date: 2005-07-01
Features: Over 100 securities firms, more than 1,300 listed companies. 300 billion yuan in funds, over 70 million investors, 4 trillion yuan in market capitalization. The Chinese securities market has grown from nothing to something, expanding at a speed that even Wall Street finds humbling. However, the problems that have followed have left Wall Street utterly astonished. Is the Chinese stock market a gambling den? Is there a bubble? Should state-owned shares be reduced, and should compensation be given for full liberalization? Does the Chinese stock market have value, or is it being marginalized? Is the "1,000-point theory" valid, or will it lead to a complete overhaul? Does the ChiNext have meaning, and does the valuation theory hold any weight? Can the "Nine Policies" be implemented, and does the management have the ability? Since the Shanghai Composite Index peaked at 2,245 in 2001, discussions about the future direction of the Chinese stock market have never ceased. The Chinese stock market is unique in the world, a capital market built on a public ownership system dominated by state-owned enterprises. The economic form of this market is the separation of shares, while the political core is centralized control. Therefore, any attempt to blindly copy Wall Street's governance model is bound to be dogmatic, aimless, and ultimately lead to a dead end. As a result, "marketization" has turned into "garbageization," and "internationalization" has become a mere formality. Shumei Lun became a scapegoat, and returnees became scapegoats. Stock investment has become a high-risk industry, and the securities market has become a place that most investors despise.
On July 1, 1921, the Communist Party of China was founded. Seventy years later, in August 1991, the China Securities Association was established. In January 1935, the Zunyi Conference, a turning point in the history of the Chinese revolution, was held. Seventy years later, in January 2005, the Chinese securities market, like the Chinese revolution at the time of the Zunyi Conference, faced its lowest point in history. From 1921 to 1935, the Chinese revolution took 14 years to find a path where Marxism was combined with the practice of the Chinese revolution. From 1991 to 2005, it was also 14 years. Can the Chinese stock market find its new historical direction? It is easy to drive out Li De, but it is hard to find Mao Zedong; it is easy to criticize returnees, but it is hard to establish new thinking; it is easy to attack the China Securities Regulatory Commission, but it is hard to build a new institution. Policy is our life, and strategy is equally our life. "Big Talk Policy Market" includes more than 100 selected essays from Shui Pi's 400+ comments since 2001, divided into four parts: Big Is, Big Non, Big Wisdom, and Big Confusion.
What is Big Is? The "is" refers to the law. Whether it is the "Nine Policies" or "rescuing the market," they address the "contradictions" of the Chinese stock market, thereby seeking a bright "future" for it.
What is Big Non? The "non" refers to mistakes. "Popping the bubble" led to the "1,000-point theory," and the index was pushed down, but the market did not restart. Instead, a grotesque "enterprise board" emerged. The fact that this board was born so stubbornly shows that the power of interest groups has exceeded people's imagination.
What is Big Wisdom? The "wisdom" refers to intelligence; Big Wisdom refers to great wisdom. The separation of shares is a feature of the Chinese market and a difference between the Chinese and U.S. markets. To solve the "privatization" of state-owned shares, to allow legal person shares to roll into "C-shares," and to ultimately achieve "full liberalization," we need time and the great wisdom that our generation lacks.
What is Big Confusion? The "confusion" refers to bewilderment. Why is the new "IPO" policy not recognized? Why is "institution building" so difficult? Is Shang FuLin effective or ineffective? Are "economists" playing the role of conscientious public intellectuals or capital advocates who seek profit? The facts tell us that the stock market is filled with struggles for fame and fortune. What one thinks may not be what one says, what one says may not be what one does, and what one does may not yield results. While the masses worry about the outcome, Sa Pu worries about the. Where is the "policy market" heading? It concerns every investor and every Chinese person.