Source: Global Times Published: 2019-2-27
Reporters fill up the State Council Information Office press room as the new CSRC Chairman Yi Huiman greets the media for the first time on Wednesday. Photo: Chu Daye/GT
China's science and technology (sci-tech) innovation board, which will feature a pilot registration system for listed companies, took central stage as the new China Securities Regulatory Commission (CSRC) Chairman Yi Huiman greeted the media for the first time on Wednesday afternoon.
Seven out of 10 questions raised by a crowd of journalists that filled up the State Council Information Office press room dealt with the development of the new board. One was about how the new chairman felt about his job, one covered the impact of China-US trade friction, and one involved the securities sector's opening-up measures, according to a count by the Global Times.
The initial days of the new CSRC chairman's tenure coincided with one of the best periods of the Chinese capital market, the world's third-largest by value, in terms of performance.
Since Yi took the helm, the benchmark Shanghai Composite Index has risen 13.3 percent and the Shenzhen Component Index has gained 18.95 percent. The Growth Enterprise Market grew by 21.58 percent.
Markets closed mixed on Wednesday, with the Shanghai Composite Index inching up 0.42 percent to 2,953.82 closing while the Shenzhen bourse slid 0.92 percent.
One month into his job, Yi said he felt "attention from all sides and every trading day is a live show watched by millions of investors."
"I am a new soldier to the capital market," the banking veteran said, noting that he is currently focused on learning from the market and investors. Previously, Yi was the chairman of Industrial and Commercial Bank of China, the world's largest bank by assets.
However, the humble approach of Yi did not prevent his name from being one of the most-searched items on the Baidu search engine.
Further, the A-share market has seen the arrival of 700,000 new individual investors since Yi's arrival at the CSRC, according to media reports.
Focus of the day
Plans and guidelines for the sci-tech innovation board are currently close to the end of public consultations, Yi told the press conference.
Rules under consideration by the CSRC were previously reviewed and approved by the Central Committee for Deepening Overall Reform in January.
The board, which is planned for a launch in the Shanghai Stock Exchange, will experiment with a registration-based IPO system. It will be more inclusive as it will allow companies with low or no profits to list.
It is not simply a new board but institutional innovation, Yi said.
"It is not likely that companies will file applications for listing on the sci-tech innovation board in a massive and concentrated fashion when the board is ready for launch," said Huang Hongyuan, chairman of the Shanghai Stock Exchange.
"There's no list of an initial round of companies set to list, contrary to financial media reports," he said.
Potential applicants will mainly come from high-tech localities such as Beijing, the Yangtze River Delta and the Pearl River Delta, according to Huang.
More companies will come from new-generation information technologies, the bio-pharmaceutical sector, advanced manufacturing and new materials.
Dong Dengxin, director of the Financial Securities Institute at the Wuhan University of Science and Technology, told the Global Times that the sci-tech innovation board will be a breakthrough in capital market reform and serve as a template.
"But the realization of law-based regulation will be a difficult process," Dong said.
Regulators also emphasized the difficulty of rolling out the board and its potential risks for investors.
"From my read on today's conference, the preparation work for the new board is being pushed forward at a steady pace. And the regulators want high standard, high threshold from the very beginning," Dong Shaopeng, an expert advisor for the CSRC, told the Global Times on Wednesday.
There are high hopes for the new board. Wu Chenhui, a stock market investor, hailed the upcoming board. "It's the star of the future for Chinese investors," Wu told the Global Times on Wednesday.
But he said he would carefully study all potential listings before making any investment decisions. "Their products must be really high-tech to convince me."
No time agenda for the new board was provided at the press conference.
Steps of opening-up
The CSRC on Wednesday also said that more progress was achieved in 2018 in the opening-up of the Chinese securities and futures industry. The regulator approved the first foreign-controlled securities company and the first foreign custodian bank for securities investment fund.
A shares were included in the FTSE Russell Index and the S&P DJI Index. Foreign individuals who work in China are being allowed to open A-share investment accounts on more accommodative conditions, according to the CSRC.
Total financing via the Chinese capital markets stood at 7.1 trillion yuan ($1.06 trillion) in 2018, data from the CSRC showed.
Dong Shaopeng is a senior fellow of Chongyang Institute for Financial Studies at Renmin University of China.