自上世纪末以来，随着经济的飞速发展，中国的资本市场经历了强劲的增长。尽管其丰厚的规模和潜力给世界留下了深刻的印象，但这种表现却很难说具有吸引力。截至2018年12月28日，基准上证综指与年初相比下跌了“ 25％”，“使其成为全球表现最差的主要股票市场”和“ 2.4万亿美元”亏损是2002年以来彭博记录中最大的一次（“中国有”，2018年）。下降的部分原因是中美之间持续的贸易紧张关系，部分归因于``去杠杆化驱动力''，即投资者变得更加``规避风险''（``China Have the''，2018）。
China’s capital market has experienced robust growth along with the rapid economic development since late last century. Though impressed the world with its lucrative size and potentiality, the performance is hard to say appealing. As of Dec 28, 2018, the benchmark Shanghai Composite Index was “25% down” compared with where it was at start of the year, “making it the worst-performing major stock market in the world”, and the “$2.4 trillion” loss is the biggest in Bloomberg’s record since 2002 (“China Has the”, 2018). The decline is partly due to the persistent trade tension between U.S. and China, and partly attributed to a “deleveraging drive” that investors become more “risk-averse” (“China Has the”, 2018).
Rooted in a state-owned economy rather than market-oriented, the capital market in China has developed some long-lasting problems during the progress of evolvement, which impacts its efficiency and investor’s faith. Among them, factors like stringent control from central government and regulatory risk, less transparency relative to developed markets, limited investment choice, immature corporate governance, and lack of professionalism in the financial sector, are fields that concern investors most. As economic growth momentum began to slow down, the capital market in China is in urgent need for further reform, so as to catch up with its peers from capitalist economies in terms of quality, not just quantity. In the following part of this essay, fields that call for improvement and bring forward some strategies and methods accordingly will be discussed.
Relax Government Control and Build a Market-Oriented Mechanism
An efficient sustainable capital market is assumed to provide sufficient financing routes and growth opportunities to fuel the development of macroeconomy. Due to substantial government intervention, China’s market has diverted from this goal - mainly serve the interest of those state-owned assets. As commented by Zhen (2013), “China’s capital markets have become a means of implementing central government’s economic policies”, through the supervision of China Securities Regulatory Commission, and “efficiency is often not the most important goal”, this characteristic has encouraged and created room for prevailing speculation in the country. Moreover, the administration mechanism is fragmented, which directly impacts the efficiency of the whole sector. For example, the bond market is under the supervision of five separated agencies (Zhen, 2013). From the monetary perspective, regulated indicators like interest rate combining with high inflation rate have driven surplus capital to shadow banking and dampened the growth of the bond market (Zhen, 2013).
The long-lasting intervention from policymakers has prohibited China’s capital market from growing into a real market, as a result, market structure, asset prices, and investment behavior are tortured gradually, and an imbalanced capital market may conversely hurt the real economy. For the sustainable development of the market, regulators shall simplify and re-design an administration mechanism that in line with international practice, provide a favorable policy to the private sector, let the market to reward the good and punish the bad, so as to enhance efficiency and fully unleash the potential of wealth from the society.
在中国市场进行投资时，投资者的主要关切是道德方面。在2018年，由于几家上市公司的“疫苗丑闻”和“基因编辑争议”（“ China Has the”，2018），引发了卫生行业的抛售。尽管文化和政治背景有所不同，但投资者经常批评的另一部分是专业精神。例如，一些投资者关系经理缺乏对公司治理甚至财务知识的基本了解（Allen and Rui，2018）。根据阿伯丁标准投资亚洲公司公司治理负责人戴维·史密斯（David Smith）的说法，公司通常会误解“暂停意味着什么”，并且他们常常在不需要时选择暂停（Allen和Rui，2018年）。为了增强资本市场的吸引力和竞争力，中国公司应改善公司治理，以减少投资者眼中的公司级风险或人员风险。同时，监管机构和公司应努力通过与国际惯例相类似的培训或许可来保持市场人才的专业表现。
上述领域是决定中国资本市场健康发展的相互联系的因素。有利的消息是，中国政府将致力于``进一步开放，放宽法规，简化金融部门的管理''，为内陆和海外投资者建立一个``更公平''，``更透明''的市场（Ernst＆Young，2018 ）。罗马不是一天建成的，中国的资本市场有望走很长一段路，并逐步探索自己的发展模式。Open Up to Foreign Financial Institutions(FFIs)
The world’s major financial institutions, including investment banks, commercial banks, investment management companies, and insurance companies have set their footprints in China upon its entering into WTO in 2001(Ernst & Young, 2018). However, presence is one story, participation is another. Till late 2018, foreign firms were not allowed to take controlling stakes in joint ventures, and scope of business was restricted to non-core transactions - they are not permitted to touch vast business like “financial transactions, saving deposits and payment”, which in turn affects FFI’s development and profit (Tang, 2018). On the other hand, over-protection and limited competition failed to stimulate local players to improve their service standard and optimize products that offered. As a result, investors have no better choice for diversification, the prevailing investment philosophy also falls behind, even become irrational, which is harmful to the capital market in the long run.
Opening up to FFIs can not only encourage local peers to upgrade their service standard, for example, the execution of “due diligence” (Tang, 2018), but can also enrich China’s capital market with more varied products, moreover, cultivate a rational investment culture and introduce advanced financial language within local community.
Enhance Corporate Governance and Professionalism
When investing in China market, one major concern of investors is the ethic aspect. In 2018, the stock market has seen a “sell-off” in the health sector ignited by the ‘vaccine scandal’ of several listed companies and a “gene-editing controversy” (“China Has the”, 2018). Another part that frequently criticized by investors is professionalism, despite the difference in cultural and political context. For example, some investor relation managers lack basic understanding of corporate governance or even financial knowledge (Allen and Rui, 2018). According to David Smith, Head of Corporate Governance in Aberdeen Standard Investment Asia, companies generally misunderstand “what suspension means”, and they just too often choose to suspend when it is not necessary (Allen and Rui, 2018). For the attractiveness and competitiveness of capital market, Chinese companies shall improve their corporate governance so as to reduce corporate level risk or people risk in investor’s eyes. Meanwhile, regulators and companies shall strive to maintain the professional performance of talents in the market, either through training or licensing that comparable to international practice.
The above fields are interlinked factors that determine the healthy development of China’s capital market. Upside news is that the Chinese government is committed to “further opening up, relaxing regulations and streamlining the administration of the financial sector”, toward a “fairer” and “more transparent” market for both inland and overseas investors (Ernst & Young, 2018). Rome is not built in a day, the capital market in China is expected to take a long way of justification and gradually explore its own development mode.
Allen, J., and L. Rui. 2018. Awakening Governance: ACGA China Corporate Governance Report 2018. Asia Corporate Governance Association.
“China Has the World’s Worst Stock Market With $2.4 Trillion Loss”. 2018, Bloomberg.
Ernst & Young. 2018. New Era of China’s Opening Up - Unlocking Market Potential Through Trade Transformation. Ernst & Young Advisory Services.
Tang, F. 2018. “China is letting in foreign firms, but will the financial market really be open?” South China Morning Post.
Zhen, Y. 2013. China’s Capital Markets. Elsevier Science & Technology.