China’s financial marketsa future global force概要1.ppt

China’s financial markets-a future global force?- Deutsche Bank ResearchGroup A:VeronicaJojoFalconPeterRaymond Deutsche Bank Research As the trend of global financial crises, questions inevitably arise as to what and who will drive the financial markets in future years. Considering its development and vigorous pursuit of economic reform, China has been identified as one of the potential key player. China’s capital markets – structure and market development The promulgation of the Securities Law marked a milestone Strengthen the capital markets in terms of institutional framework as well as supervisory framework Full-scale economic reform took place 1978-1992 1993-1998 1999-2007 The development of China’s capital markets can be divided into three phases Chinese economy remains heavily dependent on bank finance.Bank loans account for more than 80% of total financing to the nonfinancialsector, while equity and bond issuance plays a subordinated role. Aside from financial risk concentration in the banking system this signals that capital markets are still underdeveloped. Assessment of recent developments outlook Reforms to the tradable–non-tradable share system as well as to the issuance process have been either completed or are well on track. Unified regulation and supervision are necessary to promote the development of corporate bond markets. Additionally, trading platforms and clearing systems have to be unified in order to reduce extra costs for investors and encourage product innovation across segments. Markets are still small Segments remain unbalanced and there is a lack of institutional investors Despite much progress Regulators are aware of challenges and will continue with gradual reforms The high share of retail investors with frequent trading behavior poses risks to market stability. Also, it seems that institutional investors active in China’s markets prefer short-term investment gains over longer-term investments. Therefore, it is necessary bot