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Assessing Capital Market Opening
The state media are running the same tired articles about opening
the capital market, trumpeting the limited steps taken and promising
great things. This is primarily a ploy to maintain stock market
sentiment.
The measures discussed are impressive:
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(1) Permitting foreign purchase of ‘A' shares, as a prelude to merging
the domestic ‘A' exchange and the foreign-invested ‘B' exchange;
(2) Permitting foreign companies to list on the ‘A' index;
(3) Permitting joint venture open mutual funds;
(4) Permitting foreign purchase of shares in state firms, including
service sector firms; and
(5) Widening the trading range of the RMB and easing the repatriation
of foreign currency.
A little examination, though, raises a basic question: why talk up
these changes and not just make them? Only the first item, opening
the ‘A' market, requires time and effort. Foreign companies such as
Unilever could be listed right now. Foreign stakes in some
state-owned service providers could be allowed right now. Foreign
exchange could be liberalized right now. But foreign 'A' listings
would draw capital away from needy local firms. And control of public
enterprises is a lightning rod for internal ideological conflict. As
a result, the government's words speak louder than its actions.
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China
E-Bytes
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| Unit sales of personal computers jumped 25 percent in the first
half of the year, to 2.8 million, while volume rose 18 percent to $3.5
billion. Individuals now account for 44 percent of demand. |
| In addition to easing some restrictions on investment in the
mainland, Taiwan will also more sharply limit investment in certain
sectors, such as telecommunications and banking. |
| As part of the most recent crackdown on Internet activities, the
government finally found and closed the leading dissident website.
They are now pursuing the former site manager, though they apparently
do not know his real name. |
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| Keep
up with the fast changing business environment in
China, the world's biggest and fastest-growing emerging
economy. Sinomania! recommends Orbis
Publications, Experts in Emerging Markets, for
a full range of in-depth coverage on China including
daily/weekly/monthly reports and more. |
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