Expert: China's stock market will not collapse
(crienglish.com)
Updated: 2005-06-06 14:25

Although the Composite Stock Index on the Shanghai Stock Exchange has dropped to 1,008 points, the stock market will not collapse as long as the listed companies still exist, Yi Xianrong, an expert with the Institute of Finance of the Chinese Academy of Social Sciences told the Daily Economic News Friday.

A man sits in front electronic stocks monitors in Shanghai. The future of China's deeply troubled stock markets went from bad to worse this week, slumping to fresh eight-year lows as regulators' plans to solve the overhang of non-tradable government-owned shares heightened fears more losses lie ahead.[AFP]

Yi was "full of confidence," the newspaper said, even though China's stock index recently hit the eight-year low following securities regulators' experiments to reform the split share structure.

Yi denied the prediction that the stock market may collapse, saying it is possible for the index to slump after the government decided to end the split share structure.

Many investors have not seen clearly the necessity of the reform, so it is inevitable for the index to fluctuate, he was quoted by the newspaper.

"The reform should continue without stop, and if we suspend the reform due to index slump, investors will lose confidence in the market and the government, and the stock market will die," the newspaper quoted Yi as saying.

Reformers must firmly continue reform on split share structure, which provides a good opportunity for improving market order, he said.

Even if the stock index drops by a large margin, it will rebound sooner or later, he said, citing Hong Kong's stock market in 1998 as an example.

The split share structure refers to the existence of a large volume of non-tradable state-owned and legal personal shares. This means only about one-third of the shares in domestically listed firms float on the markets. The structure puts public investors in a worse position than the actual controllers in making corporate policies and disposing of the firms' profits and assets.

Close

Today's Top News     Top China News
China's stock markets slumping to 8-year lows         Japan to scrap chemical arms left in China         Bank of China to seek strategic investors         Beijing Olympic volunteers get call-up         China-US talks fail to resolve disputes         Iraq says Saddam will face just 12 charges	Beijing Olympic volunteers get call-up       Disease threatens as more floods loom large       China's stock markets slumping to 8-year lows       Japan to scrap chemical arms left in China       Many vote on names of pandas for Taiwan       Community action turns the land green