Beijing's plan to boost Shanghai and Shenzen exchanges

As I have previously reported, China's stock exchanges continue to suffer from low volumens and are left aside in the homeland's IPOs. The Swiss financial magazine "Finanz&Wirtschaft" shows in yesterday's edition, how the Chinese government is taking action.

According to Finanz&Wirtschaft the Chinese government will now take action to enhance the attractiveness and efficiency of the mainland financial market. During the months to come Chinese companies should be able to list their shares at the Shanghai and Shenzhen stock exchanges. In May 2005, the Chinese government had stopped the planned trading of shares worth $200 billion because of insufficient trading environment. According to Mr Zhou Qine, the Vice-president of Shanghai's exchange, leading Chinese companies, such as Petrochina and China Construction Bank, will have a second listing at the Shanghai and Shenzen exchanges. Those companies are currently listed at the Hongkong exchange.

With the introduction of blue chip stock, China's exchanges should gain depht and coverage. So far, the mainland financial market concentrated on companies which were not among the drivers of an economy which grows at 9.8%.

Mr Zhou Qine estimates that the planned listings of Petrochina, China Construction Bank and Shenhua Engery should turn the mainland financial market into the biggest exchange of Asia after Tokyo and Hongkong until the end of the year. The government hopes that the listing of blue chip companies will also attract the institutional investors to the Shanghai and Shenzen exchanges. So far these markets had been dominated by private investors.





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