Securities reform lifts investor confidence
October 02, 2006 | BY
clpstaff &clp articles &Since China launched its reform of the domestic capital markets in May 2005, requiring listed companies to convert non-tradable state-owned shares into…
Since China launched its reform of the domestic capital markets in May 2005, requiring listed companies to convert non-tradable state-owned shares into tradable shares, many companies have reported positive interim results, which have lifted investor confidence in the A-share market.
By the end of August 2006, of the 1,392 domestic listed companies in China, 1,388 had released higher-than-expected earnings forecasts, reports China Daily. Business in the life insurance, industrial, tollroad and aluminium sectors experienced an upswing, while property, casualty, insurance and coal companies reported lower-than-expected earnings.
By August, 90% of the total domestic listed firms had finished or commenced their securities reforms. Analysts say that the success of the reforms is only now starting to take effect, as evidenced by the companies' improved performance and corporate governance.
A recent report by JP Morgan says that China's A-share market is now fuelled by five forces: the success of the non-tradable share reforms, enhanced corporate governance, a diversified investor base, high-quality upcoming IPOs and healthier growth in earnings per share.
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