Shanghai starts simulated trade in equity options

The China Securities Journal reported earlier this month that the SSE may officially introduce formal equity options trading in April. Some analysts believe the move is meant to stimulate investment in China's blue chips, which have been trading at depressed valuations.

The average price-earnings ratio for the SSE, where most of China's blue chip companies are listed, stands at only 11 times 2012 earnings. On the Shenzhen exchange, which is dominated by small-cap companies, the average ratio is 28.

Change for WMPs

Another development involving the liberalization of the financial markets took place on Wednesday, this one involving wealth management products.

WMPs will be allowed to invest directly in fixed-income products on domestic securities markets, the China Securities Depository and Clearing Corp announced.

The notice said that WMPs will be allowed to open accounts at the Shanghai or Shenzhen stock exchanges. Investment will be confined to fixed-income products, including exchange bonds, credit-backed securities and preferred shares. The latter are often classified as fixed-income products because of their fixed dividend.

Analysts said that the move on WMPs is intended to provide a bridge "linking" interbank market liquidity with the nation's stock exchanges, even though WMPs can't make direct stock investments at this stage.

The outstanding balance of WMPs stood at 9.92 trillion yuan ($1.63 trillion) as of Sept 30, the China Banking Association said earlier this month.

The figure has more than doubled since the end of 2011, and it's up from 7.1 trillion yuan at the end of 2012.