Privatizing China : Inside China's Stock

This book will answer many people's questions regarding SOEs and the stock market. I think it is destined to become the standard reference work on the subject. - Jean C. Oi, Director, Center for East Asian Studies, Stanford University

Carl E. Walter is a Managing Director of JP Morgan and Chief Operating Officer of its China businesses. Prior to joining JP Morgan in 2001, Mr. Walter was a Managing Director and Member of the Management committee of China International Capital Corporation. He was Chief Representative in Beijing for Credit Suisse First Boston from 1993-8. During his 15 years in china, Mr. Walter has participated in a number of groundbreaking international and domestic share listings and debt issues for Chinese companies, banks and the Ministry of Finance. He holds a PhD from Stanford university and a graduate certificate from Beijing University.

Fraser Howie has been trading, analyzing and writing about Asian stock markets for 15 years. During that time he has worked in Hong Kong, trading equity derivatives at Bankers Trust and Morgan Stanley. After moving to China in 1998, he worked in the sales and trading department of China International Capital Corporation followed by a stint with China M&A Management Company. He is a frequent speaker on the Chinese stock markets having spoken in Hong Kong, Tokyo, Beijing, Shanghai, Singapore and Cambridge. He currently works for a leading Asia-Pacific investment bank in Singapore helping international investors invest in both the Indian and domestic Chinese markets.

Preface

xi

List of Abbreviations

xv

Chronology

xvii

1. "You're None of Those!"

1

(18)

2. How China's Stock Markets Came to Be

19

(26)

The evolution of the Shenzhen and Shanghai securities markets

21

(8)

Original structure of the Shanghai and Shenzhen exchanges

29

(4)

The Stock Exchange Executive Council and the electronic markets (STAQ and NETS)

33

(6)

The regional trading centers

39

(2)

The auction houses

41

(1)

The Third Board

42

(3)

3. Who Minds the Fox: The Regulators

45

(22)

The PBOC: Market player or market regulator?

46

(5)

Building the CSRC

51

(3)

The internationalization of the CSRC

54

(2)

The Stock Exchange of Hong Kong goes to the top

56

(1)

The CSRC's domestic struggle

56

(4)

Regulatory philosophy

60

(1)

The CSRC takes the initiative, 2000-02

61

(6)

4. Defining Ownership: Share Types

67

(18)

Shares of what?

69

(4)

The 1992 Standard Opinion

73

(5)

The 1994 Company Law

78

(4)

Listed company shares

82

(1)

The 1999 Securities Law

83

(2)

5. Packaging SOEs: Restructuring and Listing

85

(22)

Evolution of Chinese corporate law

86

(5)

How to "package" an SOE

91

(4)

Corporate restructuring for international listing

95

(12)

6. The Fortunate Few: Listed Companies

107

(24)

Who decides who lists?

109

(2)

International pricing

111

(1)

A share pricing

112

(1)

Analysis of listed companies

113

(16)

A note on private companies

129

(2)

7. Where Have All the (Retail) Investors Gone?

131

(34)

How many investors?

132

(10)

Who are China's investors'

142

(23)

8. Sliced and Diced: China's Segmented Stock Markets

165

(28)

Segmented markets

167

(14)

Is there a company value?

181

(3)

Economic inefficiencies of segmented markets

184

(2)

Circles of ownership

186

(3)

Privatization with Chinese characteristics

189

(4)

9. Searching for the Big Fix, 2001-05

193

(26)

Trying to merge the segmented markets

194

(4)

The character of the market in the new century

198

(5)

Coming up with the Big Fix

203

(4)

The terms of the debate about state shares

207

(2)

The securities industry debacle

209

(10)

10. How CSRC Sought to Merge the Markets: the G Company Reform

219

(22)

SASAC: defender of state property rights

219

(3)

The CSRC's "Final Fix"

222

(1)

Pilot cases of the new policy

223

(10)

Warrants and SASAC's champion: BaoSteel

233

(8)

11. Foreign Investors in China's Stock Market

241

(22)

All about QFII

242

(7)

How is QFII being used'?

249

(6)

QFII investment allocation

255

(1)

Does QFII matter?

256

(2)

Foreign investment in non-tradable (then tradable) shares

258

(5)

12. Bulls and Bears: Summing Up

263

(22)

China's bull markets, 1990-2001

264

(6)

The end of an era: China's Internet boom and bust, 2000-05

270

(4)

Taking the market's measure

274

(6)

A summing up

280

(5)

Appendices

Appendix 1: China's Red-Hot Primary Markets

285

(3)

Appendix 2: Glossary of English/Chinese Securities Terminology

288

(4)

Endnotes

292

(31)

Select Bibliography

323

(4)

Index

327

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Privatizing China : Inside China's Stock Markets

Summary

Author Biography

Table of Contents

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Privatizing China : Inside China's Stock Markets

Summary

Author Biography

Table of Contents

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