By: East China Normal University, Dr. Li Zhilin
Compiler: http://www.fundcn.org

In the United States, Europe, Hong Kong and other international mature stock market, 5% above the crash several years a rare event, Heads of government will have to stand up and save the city. However, in China’s stock market, the past two years, particularly since the beginning of this year, soaring by 3% is very rare, However, 4-8% of the drop has become commonplace, and by the previous once a month, a week into recent times even several days in a row; from the previous weekend, the end of evolution for the whole week, the whole month before. This shows that China’s stock market management to control the healthy operation of inadequate capacity, poor stability of the stock market, protection of the interests of medium-sized and small investors do not in place.

I think this, the management control should be the focus of the stock market rising from suppression and squeeze the bubble, and changes to the governance customary slump.

1, Should get rid of the index artificially created “Top policy.” Last year, from May to July, a four authoritative media criticized the stock market “irrational rise” news commentaries, 1750 became prolonged high point of the “Top policy.” In early August, Tu Guangshao, vice chairman of the SFC is made, “the SFC index ups of the past, no matter now, No matter the future, “and only breakthrough of the” Top policy. ” But this promise was still being abandoned. This year from January to March, 3000 became the strong point of the “Top policy,” 06 is the annual report on the growth performance of 46.4%. only resolved. Today, the “5.30″ incident of stamp duty and “6.20″ after the “Big Five unprofitable” in 4300 are issued by the above points, then 4,300 points again become a well-known “policy Top” “M top policy first.” According to the statistics I ,4-8% of the drop occurred in a densely also issued a bad cast of the “top policy”, or the market “policies cover” to achieve consensus, especially in the weekend and the end. 17 “City policy” has now reached the point where, in clear violation of the law of the market economy. In overseas stock markets, for example, the Russian stock market from 02 so far, up 1,800%. Brazil has 02 stock market rising 547%, the Indian stock market from 03 up 500% so far. The government there has never been a “top policy,” said one. where investors have never used or considered worried that the government “policy top” pressure on the stock market from unprofitable. By contrast, Chinese investors really live too tired and too sad.

2,Introduced unprofitable control policies should make an accurate interpretation and give the market a clear expectations. For example, the recent cancellation or reduction of the interest tax The newly news, some media and the network news headline is : “abolish interest tax equivalent to seven interest rate increases.” Again, the Ministry of Finance issued 1.55 trillion yuan in special bonds to the news media and how to deal with : “equivalent to 10 times to raise bank deposit reserve rate, the stock market will be big for blood.” Such exaggeration said, exacerbated the market’s fears, triggered consecutive drop. In fact, by not increasing the tax on listed companies borrowing costs, but increased deposit receipts; Not only increased the deposit receipts residents, also raised its head households Yinzhengzhuaizhang shareholders funds of the proceeds; not the bad, but good. As for the special bonds because the interest rate is higher than deposits, most of the savings and loan will be poor as much as 10 trillion dollars to monopolize the commercial banks. raise the income of the banks, the stock market is not bad, but good. However, the policy-making departments have not made the work of propaganda and explanation, or even cause the market misreading, suppress the stock market has become “megaton bomb.”

3,Right when the stock price plummeted changes, but it’s illegal to strengthen regulatory investigation. Currently, the management of market regulators investigated irregularities focused on the main road right up to do, a sharp increase in prices of units. In fact, when the main force will drop all the way down share prices so irregularities is no less significant than boom. For example, “5.30″ which plummeted third consecutive five stock indices, the third consecutive three stock indices, adopted by the main tactic of using right down, fling pressure, sell or buy on their own manufacturing shocks, double the increase bargaining chips in future profits. In foreign stock markets, reversing right the way down so as a breach to the sentence, while in China’s stock market with impunity, is like entering a new territory unopposed, no one cases have been investigated and this situation has gone from bad to worse. causing over 500 stock price within one month have been canceled.

4,Officials should carefully assess the wake of the stock market bubble and the number of levels. This week slump with several comments on the central bank governor and the wake of the stock market bubble closely related. However, the evaluation of the premise has been plunged into a series of misunderstanding. (1) the price-earnings ratio as a valuation yardstick. (2) with the United States and the Hong Kong stock market 30 and 36 samples Unit 16 -20 times the average price-earnings ratio as a yardstick. determination of all the Chinese stock market 36 times the average price-earnings ratio is too high, the object of a mistake. (3) there is no mentioning of-50 Index, the Shenzhen Component Index wake of the stock market than the foreign price-earnings ratio or H shares, Shanghai Stock Index and the average price-earnings ratio than the weighted average foreign stock markets lower price-earnings ratio. (4) the performance of listed companies as much as 40% annual growth rate over China’s stock market conform to the standards of what should be the average price-earnings ratio is how much they are true. (5) The market for a new stock issue prices unusually high price-earnings ratio (Life 97 times, ensuring peace, Industrial Bank 75 times. pay OK, CITIC Bank 58 times, 98 times China Ocean), a vicious phenomenon of money, turn a blind eye, Nothing was said. about two times the market price-earnings ratio of 36 in every possible way censure. Such double standards on the valuation of judges and the Chinese government has always opposed the “double standards” as very ridiculous.

5,Should be the protection of national interests and the interests of medium-sized and small investors in the first place. From June 2005, May 2007, listed companies non-tradable shares value of 9.2 trillion. is 2006 157 central enterprises 3.9 trillion in net assets of 2.35 times. However, the “5.30″ drop 4 ½-circulation on the market evaporated 3 trillion, resulting in massive loss of state-owned assets; circulation on the market evaporated 1.2 trillion, with the “6.20″ has plummeted, a significant number of small and medium-sized investors wiped out this year’s profit ,4-5 buy of the new shareholders is stuck above 30%. The severity of the problem lies : the top of the bad policy is a one followed, and everybody is real, and the steep fall in a row after having no substantive benefit introduced, just issued an editorial investors to correctly understand and correctly treated, empty claimed : “rising trend has not changed”; drop-consecutive indices, as the hurricane, and the rebound only intermittently, The slight. It is learned that the Securities and Exchange Commission, the gate of a vertical brand, reading : “Wall Street’s objective is : like to help 70 to 80-year-old woman crossing the road so carefully protected-sized investor interest. ” How, in the face of the first half of this year occurred in 20 4-8% of the crash, medium-sized and small investors have been seriously hurt in a critical situation. Is our management should focus on governance “customary slump,” and to come up with concrete initiatives?

Copyright Fund China 2009.

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