Chapter
1.5.2 BONDS ISSUED BY SECURITIES COMPANIES
1.6.1 LISTING OF SECURITIES
1.6.2 TRADING OF SECURITIES
1.7.1 OVERSEAS LISTED COMPANIES
1.9 SECURITIES DEPOSITORIES AND CLEARING
1.9.1 OTHER SECURITIES TRADING SERVICE INSTITUTIONS
1.9.2 INSTITUTIONAL INVESTORS
1.11 QUALIFIED FOREIGN INSTITUTIONAL INVESTORS (QFIIs)
1.12 OTHER MAJOR INSTITUTIONAL INVESTORS
1.12.1 NATIONAL SOCIAL SECURITY FUND
1.12.2 INSURANCE COMPANIES
1.12.3 CORPORATE ANNUITY FUNDS
1.12.4 SECURITIES INVESTOR PROTECTION FUND
1.13.1 SHANGHAI STOCK EXCHANGE (ShSE)
1.13.2 SHENZHEN STOCK EXCHANGE (SzSE)
1.14.1 FUTURES BROKERAGE COMPANIES
1.14.3 SHANGHAI FUTURES EXCHANGE
1.14.4 DALIAN COMMODITY EXCHANGE
1.14.5 ZHENGZHOU COMMODITY EXCHANGE
1.16 REGULATORY SYSTEM AND ORGANIZATIONAL STRUCTURE
Part I China’s Money and Foreign Exchange Markets
2.1.1 RMB INTERBANK LENDING MARKET
2.1.2 OUTRIGHT REPO MARKET
2.2 HISTORY AND STATISTICS
2.2.2 HISTORY OF INTERBANK LENDING
2.2.3 DEVELOPMENT OF INTERBANK LENDING
2.2.4 STATISTICS FOR INTERBANK LENDING
2.3 REPO (OUTRIGHT REPO) MARKET
2.3.1 ESTABLISHMENT OF EXCHANGE REPO MARKET
2.3.2 ESTABLISHMENT OF THE INTERBANK REPO MARKET
2.3.3 REPO MARKET STATISTICS
2.4.1 HISTORY OF THE INTERBANK BOND MARKET
2.4.2 ORGANIZATIONAL STRUCTURE
2.4.3 FRAMEWORK OF THE INTERBANK BOND MARKET
2.4.4 DEVELOPMENT OF THE INTERBANK BOND MARKET
2.4.5 SIGNIFICANCE OF THE INTERBANK BOND MARKET
2.4.6 STATISTICS IN THE INTERBANK BOND MARKET
2.5.1 DEVELOPMENT OF THE BILLS MARKET
2.6 REGULATION AND SUPERVISION
2.7 THE PEOPLE’S BANK OF CHINA
2.7.1 MAJOR RESPONSIBILITIES
2.7.2 INSTITUTIONAL ARRANGEMENT
2.7.3 THE CHINA FOREIGN EXCHANGE TRADING SYSTEM
2.7.4 RMB VOICE BROKERING
2.8.1 MONETARY POLICY INSTRUMENTS
2.8.2 MONETARY POLICY COMMITTEE
2.8.3 RULES ON MONETARY POLICY COMMITTEE OF THE PEOPLE’S BANK OF CHINA
2.9.1 THE CENTRAL BANK’S OPEN MARKET ACTIVITIES
2.10 SOME CURRENT PROBLEMS
2.10.1 ONE-WAY FLOW OF CAPITAL
2.10.2 IMPERFECT INTEREST-RATE-FORMING MECHANISM
2.10.3 INFLUENCE OF THE CENTRAL BANK
3 China’s Money Markets: Policies and the Banks
3.1.1 PRESSURE TO LIBERALIZE
3.1.2 THE MONEY MARKET: INSTRUMENTS DEVELOPMENT
3.1.3 INTERBANK LENDING AND BORROWING
3.2.2 BOND TRADING IN THE INTERBANK MARKET
3.2.3 EXCHANGE RATE POLICY AND THE DEVELOPMENT OF THE GOVERNMENT SECURITIES MARKET
3.3.1 DEVELOPMENTS IN REPOS
3.4 BONDS AND MONETARY POLICY
3.4.1 RESERVE REQUIREMENTS
3.4.2 CENTRAL BANK BASE RATE AND CENTRAL BANK LENDING
3.4.3 OPEN MARKET OPERATIONS
3.5 ACCEPTANCES AND COMMERCIAL PAPER
3.6 FOREIGN PARTICIPATION IN SECURITIES
3.7.2 ASSET SECURITIZATION
3.7.3 FOREIGN BANK OWNERSHIP IN CHINESE BANKS
APPENDIX: AN OVERVIEW OF CHINA’S BANKS
A.4 STATE-OWNED COMMERCIAL BANKS
A.5 JOINT STOCK COMMERCIAL BANKS
A.6 URBAN COMMERCIAL BANKS
A.8 POSTAL SAVINGS INSTITUTIONS
4 China’s Foreign Exchange Markets
4.1 CHINA’S FOREIGN EXCHANGE CONTROLS
4.2 A HISTORY OF CHINA’S FOREIGN EXCHANGE SYSTEM
4.3 THE EXCHANGE RATE REGIME
4.4 CHINA’S FOREIGN EXCHANGE MARKET
4.4.2 THE INTERBANK MARKET: SPOT TRANSACTIONS
4.4.3 AUTHORIZED FOREIGN EXCHANGE BANKS THEIR CUSTOMERS
4.4.4 THE INTERBANK MARKET—FORWARD OUTRIGHT TRANSACTIONS
4.4.5 AUTHORIZED FOREIGN EXCHANGE BANKS AND THEIR CUSTOMERS—FORWARD OUTRIGHT TRANSACTIONS
4.4.6 AUTHORIZED FOREIGN EXCHANGE BANKS AND THEIR CUSTOMER—FX SWAP TRANSACTIONS
4.4.7 THE INTERBANK MARKET—FOREIGN EXCHANGE CURRENCY PAIRS
4.5 THE “OTHER” FOREIGN EXCHANGE MARKET
Part II China’s Bond Markets
5.1 STRUCTURE OF CHINA’S BOND MARKET
5.1.2 BASIC INSTRUMENTS IN THE BOND MARKET
5.1.3 BOND MARKET INVESTORS
5.1.4 HOW THE BOND MARKET OPERATES
5.1.5 AN OUTLOOK ON CHINA’S BOND MARKET
5.2 STATISTICS AND FIGURES
5.2.1 FLUCTUATIONS IN THE SECONDARY MARKET
5.2.2 THE SCALE OF THE SECONDARY BOND MARKET
5.3 REGULATION AND SUPERVISION
5.4 TRADING IN CHINA’S BOND MARKET
5.4.3 OTHER ELEMENTS INFLUENCING BOND TRADING
6 China’s Convertible Bond Market
6.2 DEVELOPMENT OF THE MARKET
6.4 CONVERTIBLE HOLDERS AND MARKET PLAYERS
6.5 CONVERTIBLE BONDS VERSUS STOCK OR CORPORATE DEBTS
Part III China’s Equity Markets
7.2 STRUCTURE OF THE CHINESE STOCK MARKET
7.2.1 SHANGHAI STOCK EXCHANGE
7.2.2 SHENZHEN STOCK EXCHANGE
7.2.3 SETTLEMENT AND CLEARING
7.3.1 HISTORICAL BACKGROUND
7.3.2 ORGANIZATION OF THE CSRC
7.3.3 MAJOR RESPONSIBILITIES
7.4 SPECIAL CHARACTERISTICS OF THE CHINESE STOCK MARKET
7.4.3 EVOLUTION OF CORPORATE STRUCTURE IN CHINA
7.5 SOME SPECIAL CHARACTERISTICS OF THE CHINESE STOCK MARKET
7.5.1 CAPITAL STRUCTURE IN THE CHINESE STOCK MARKET
7.6 WEAK MARKET FOUNDATIONS
7.6.1 ETHICAL ISSUES AND EXAMPLES
7.6.2 ACCOUNTING AND AUDITING
7.6.3 MARKET INEFFICIENCIES
7.7 FINANCIAL DISTRESS AND BROKERAGES
8 A History of China’s Stock Markets
8.2 FIRST PHASE: THE STOCK MARKET IS BORN
8.3 SECOND PHASE: RAPID GROWTH
8.3.1 EVOLUTION OF THE IPO PRICING MODEL
8.3.2 SECONDARY MARKET VOLATILITY
8.4 THIRD PHASE: ENFORCING REGULATIONS
8.5 FOURTH PHASE: THE SPECULATIVE BUBBLE
8.5.1 THE START OF THE BUBBLE
8.5.2 END OF THE BUBBLE AND THE BEAR MARKET
8.6.2 REGULATION AND SUPERVISION
8.6.3 THE BIG BANG IN CHINA
8.6.4 WOOING INSTITUTIONAL INVESTORS AND OPENING THE MARKET
8.7 STATE-OWNED SHARE LIQUIDATION
8.7.1 STATE-OWNED SHARE REFORMS
Part IV China’s Futures and Derivatives Markets
9 China’s Futures Markets
9.1.1 EVOLUTION OF THE FUTURES EXCHANGES IN CHINA
9.3.1 CHINA SECURITIES REGULATORY COMMISSION
9.3.2 CHINA FUTURES ASSOCIATION
9.3.4 THE STRUCTURE OF LAWS AND RULES
9.4.1 FIRST STAGE: 1990–1994
9.4.2 SECOND STAGE: 1995–1998
9.4.3 TREASURY BOND FUTURES AND THE “327 EVENT”
9.4.4 THREE-PLY FUTURES CONTRACT AND THE “9407” EVENT
9.4.5 STEEL WIRE FUTURES CONTRACT 9405
9.4.6 SPECULATION ON THE THREE-PLY CONTRACT IN 1995
9.4.7 SUZHOU RED BEAN FUTURES: 1996
9.4.8 HAINAN COMMODITY EXCHANGE SPECULATION
9.5 THIRD STAGE: 1998–2001
9.6 FOURTH STAGE: 2002–PRESENT
9.7 SOME EXISTING PROBLEMS
9.7.1 WEAKNESSES IN REGULATION
9.7.2 LIMITED NUMBER OF PRODUCTS
9.7.3 SOPHISTICATION OF PROFESSIONALS
9.8.1 IMPROVING THE COMPOSITION OF MARKET PARTICIPANTS
9.8.3 UNIFORM SETTLEMENT AND CLEARING HOUSE
9.8.4 FUTURES INDUSTRY OPENS TO THE OUTSIDE WORLD
10 China’s Derivatives Markets
10.5 NEW RULES IN FX DERIVATIVES
10.7 INTEREST RATE DERIVATIVES
10.7.1 INTEREST RATE SWAPS
10.8.1 THE FIRST ABS DEALS
10.8.4 A CHRONOLOGY LEADING TO CDOS
Part V China’s Mortgage, Insurance, and the Funds Industry
11 China’s Mortgage and Housing Market
11.3 THE SITUATION IN THE REAL ESTATE MARKET
11.3.1 IMPROVING SUPPLY–DEMAND RELATIONSHIP
11.3.4 FOREIGN INVESTMENT
11.4.1 PHASE TWO: SPECULATION (1992–1995)
11.4.2 PHASE THREE: RELATIVELY STABLE DEVELOPMENT ( 1995– 2002)
11.4.3 PHASE FOUR: HIGHER PRICES MACROREGULATION
11.5 DEVELOPMENT OF THE MORTGAGE MARKET
11.6 BASIC PARAMETERS OF THE MORTGAGE MARKET
REAL ESTATE DEVELOPERS’ LOANS
11.6.3 PERSONAL MORTGAGES
POLICY-ENCOURAGED MORTGAGES
11.6.6 SURPLUS RESERVE SYSTEM
11.7 REASONS CONTRIBUTING TO THE RAPID DEVELOPMENT OF MORTGAGES
11.8 RISKS IN THE CURRENT REAL ESTATE MARKET
11.8.1 OVERHEATED MARKETS
11.8.2 HIGHLY INDEBTED REAL ESTATE DEVELOPERS
11.9 CONCLUSIONS: THE FUTURE
LAND POLICIES AS A MEASURE OF REGULATING REAL ESTATE DEVELOPMENT
REAL ESTATE CREDIT POLICY
12 China’s Insurance Market
12.1.1 PRE-1949: STARTING PERIOD
12.1.2 1949 TO LATE 1970S: PERIOD OF STATE OPERATIONS
12.1.3 LATE 1970S TO 1995: A REVIVAL
12.1.4 SINCE 1995: THE BOOM
12.1.5 SUMMARY OF HISTORICAL DEVELOPMENT
12.2.1 LIFE INSURANCE AS THE MAIN TYPE OF CHINESE INSURANCE
12.2.2 FEW BIG COMPANIES STILL DOMINATE THE CHINESE INSURANCE MARKET
12.2.3 CHINESE DOMESTIC INSURANCE COMPANIES VERSUS FOREIGN INSURANCE COMPANIES
12.2.4 REGIONAL IMBALANCES
12.2.5 FULLY OPENED CHINESE INSURANCE MARKET
12.3.1 LIFE INSURANCE COMPANIES
12.3.2 PROPERTY INSURANCE COMPANIES
12.4 REINSURANCE COMPANIES
12.5 BROKERS AND AGENCIES
12.5.1 LIFE INSURANCE PRODUCTS
12.5.2 HEALTH INSURANCE PRODUCTS
12.5.3 PROPERTY INSURANCE PRODUCTS
12.6.2 BANK AND OTHER SIDELINE INSTITUTIONAL AGENTS
12.6.3 INSURANCE INTERMEDIARY COMPANIES
12.6.4 DIRECT MARKETING CHANNEL
12.7 INVESTMENT MANAGEMENT
12.7.1 NEW ASSET MANAGEMENT STYLE
12.7.2 NEW INVESTMENT CHANNELS
12.10 APPENDIX: CONTACT INFORMATION FOR RELEVANT INSTITUTIONS
13 Investment Funds in China
13.1 HISTORY AND INTRODUCTION
13.1.3 ALTERNATIVE INVESTMENTS
13.2 SECURITIES INVESTMENT FUNDS
13.2.1 LOCATION OF FUND MANAGEMENT COMPANIES
13.2.2 RECENT DEVELOPMENTS
13.2.4 INSURANCE COMPANIES
13.4.1 CASE STUDY: DE LONG
13.5.1 REGULATIONS REGARDING SECURITIES INVESTMENT FUNDS
13.6.1 FUND MANAGEMENT COMPANIES FUND CUSTODIANS
13.6.2 ESTABLISHMENT AND TRADING OF FUNDS
13.6.3 RESTRICTIONS, DISCLOSURE, AND SHAREHOLDER PROTECTION
13.6.5 INSURANCE COMPANIES
13.6.6 QFIIS: REGULATORY ISSUES
13.6.8 REGULATORY ISSUES RELATED TO PRIVATE FUNDS
13.7 PROBLEMS AND FUTURE TRENDS
13.7.1 CONCLUSIONS: FUTURE OF INVESTMENT FUNDS IN CHINA
Chinas Financial Markets
：An Insider's Guide to How the Markets Work
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