Vol. 3 SSE Newsletter March 2013 Highlights: SSE Composite fluctuated with a downward trend in March 2013. The SSE provided service for listed companies carrying out investor relation management at SSE Trading Floor. The SSE held the activity named I am a Shareholder. The CSRC promulgated the Measures for the Pilot Scheme of Securities Investments in China Made by RMB Qualified Foreign Institutional Investors and the Rules for Implementing the Measures for the Pilot Scheme of Securities Investments in China Made by the RMB Qualified Foreign Institutional Investors. The CSRC released the Tentative Administrative Rules for Debt Financing Instruments of Securities Companies (Consultation Draft ) and Interim Rules for the Utilization and Management of Proprietary Funds by Fund Management Companies (Consultation Draft) etc. Shanghai Stock Exchange www.sse.com.cn 1
1. Overview of SSE Market For the last 12 months (April 2012 March 2013), the SSE Composite Index started at 2302.24 (closing price, hereinafter inclusive) on Apr. 5 th 2012. The index reached its highest point (2452.01) on May. 4 th 2012 and the lowest (1959.77) on Dec. 3 rd 2012. In March 2013, the index generally reflected a downward trend, reaching the lowest point of 2236.62 on Mar. 29 th. There have been 241 trading days from April 2012 to March 2013. The daily average turnover value is USD 11.64 billion for the period. The single day turnover value peaked at USD 24.24 billion on Feb. 4 th 2012, and the lowest of USD 5.26 billion on Nov. 26 th 2012. The daily turnover is USD 15.46 billion for March, which showed slight decrease compared to that of the previous month. In terms of accumulated turnover of March 2013, the top 3 sectors are Manufacturing (USD 138.2 billion), Finance & Insurance (USD 76.1 billion) and Mining (USD 18.8 billion). Shanghai Stock Exchange www.sse.com.cn 2
In terms of money flow, the following 2 sectors delivered positive figures in March 2013: Education and Rent & Business Service. The volumes are USD 8.4 million and USD 1.1 million respectively. Among the sectors with negative figures in March 2013, the top 3 are Manufacturing (USD 1254 million), Finance & Insurance (USD 1076 million) and Real Estate (USD 308 million). In March 2013, the daily average trading volume of ETF is USD 484 million, which represents a growth rate of 185% compared with USD 170 million in March 2012. The volume reached its highest point of USD 706 million on Mar. 20 th 2013 and the lowest of USD 298 million on Mar. 11 th 2013. 2. SSE Updates Designed to serve as new benchmarks and investable underlyings for investors, SSE and CSI announced the upcoming launch of SSE Culture Industries Index, CSI Culture Industries Index and CSI Services Industry Index. SSE Culture Industries Index and CSI Culture Industries Index Shanghai Stock Exchange www.sse.com.cn 3
cover the market cap of RMB 205.4 billion and RMB 384.9 billion, which accounts for 1.2% of A-share in Shanghai market and 1.6% of total A-share respectively. CSI Services Industry Index covers the market cap of RMB 10.07 trillion which accounts for 41% of total A-share. To further enhance the index family as well as to provide new analysis tools and underlying instruments for investors, SSE and CSI announced the launch of SSE Dividend Return Index and CSI Dividend Return Index. Both of the indexes are designed to measure the performance of investor protection by calculating the ratio of cash dividend against the amount of financing proceeds. The higher the ratio, the better the listed companies returned to its investors. The 5th Awarding Ceremony for Investor Education Work and inauguration of the activity of I am a Shareholder in 2013 were held by the SSE. By online registration and voting on the SSE investor education website, investors voted for the SSE-listed companies they most wanted to visit. This was I am a Shareholder, an event provding a chance for small and medium investors to visit listed companies, aiming to urge investors to foster their awareness of being shareholders, encourage their initiative in exercising shareholders rights, and advocate the concepts of rational investment and value investing. The SSE set goals to fuel 2013 1+5 Major Tasks. 1 means operation safety. The government work report required guarding the bottom line of zero systematic and regional financial crises and guiding the stable and sound operation of financial institutions and strengthening the regulation on partial and regional risks as well as risks in off-balance sheet businesses of financial institutions to enhance the financial industry s sustainability in supporting economic growth. It is the exchange s fundamental task to ensure the safe operation of the exchange market and prevent systematic risks. On the other hand, 5 refers to the five aspects including the new products and businesses of the multi-tiered blue chip market, the bond market, and funds, as well as the reinforcement of the SSE s internationalization and the building of the institutional-investor-oriented service platform. The SSE announced that it decided to provide transfer service for asset-backed securities, which would be temporarily exempted from the fee related to their listing, in a bid to regulate the transfer of asset-backed securities and propel the growth of the assets securitization business. The SSE released and implemented the SSE Provisional Measures on Investor Suitability Management for guiding investors to rationally participate in securities investment and protecting their legitimate rights and interests, with the aim of implementing the requirements of the CSRC for investor suitability management, regulating the investor suitability management on the SSE market, and strengthening the protection of legitimate rights and interests of investors under the backdrop of the acceleration of product and business innovation. Zhejiang CHINT Electrics Co., Ltd. (CHINT for short) held a briefing for its annual performance Shanghai Stock Exchange www.sse.com.cn 4
of 2012 at the trading floor of the SSE for the first time. The move was a rapid implementation of the proposal of Providing Service for Listed Companies Carrying out Investor Relation Management at SSE Trading Floor put forward by Mr. Gui Minjie, Chairman of the SSE Board of Governers. 3. Key Statistics of China CPI has been fluctuating in the last twelve months. The YoY growth rate was 3.40% in April 2012, and reached the lowest point of 1.70% in October 2012 followed by a rebound in December (2.50%). The ratio increased to 3.20% in February 2013, and dropped to 2.10% in March 2013. From April 2012 to March 2013, M2 generally kept its increasing momentum. M0 increased from USD 0.80 trillion in April 2012 to USD 0.88 trillion in March 2013; M2 increased from USD 14.1 trillion in April 2012 to USD 16.4 trillion in March 2013. Funds raised to new loan ratio is volatile on China s exchange market. The average from April 2012 to March 2013 is 5.8%, with the highest of 11.9% in December and the lowest of 2.7% in Sepetmber 2012. Shanghai Stock Exchange www.sse.com.cn 5
4. Policy Updates on China's Capital Market The CSRC has released the Tentative Administrative Rules for Debt Financing Instruments of Securities Companies (Consultation Draft ) and solicited comments on this rule from the public. Securities companies had a limited range of financing channels and lack continuous and effective long-term financing channels due to historical reasons. It is imperative for the industry to develop new financing channels to meet financing demands due to business expansion. In order to support efforts of securities companies to expand financing channels and to provide a larger range of more flexible financing instruments for investors, the CSRC has drafted this rule. While further particularizing existing provisions on bonds and subordinated debts of securities companies, the rules allow securities companies to issue beneficiary certificate, a new financing instrument, in accordance with relevant regulations. The CSRC has promulgated the Measures for the Pilot Scheme of Securities Investments in China Made by RMB Qualified Foreign Institutional Investors and the Rules for Implementing the Measures for the Pilot Scheme of Securities Investments in China Made by the RMB Qualified Foreign Institutional Investors. In order to further open up the capital markets, support Hong Kong s role as an international financial hub and facilitate the development of Hong Kong s off-shore RMB market, the CSRC has, on the basis of carrying out intensive negotiations with the People s Bank of China, the State Administration of Foreign Exchange and other government departments, decided to revise RQFII-related regulations so as to expand the RQFII pilot scheme. The major changes include diversifying the types of institutions involved in the pilot scheme and relaxing restrictions on investment scope. The CSRC has started the solicitation of public comments on the Interim Rules for the Utilization and Management of Proprietary Funds by Fund Management Companies (Consultation Draft) for an input period of half a month. The CSRC has started the solicitation of public comments on the revised drafts of the Trial Administrative Measures for Overseas Securities Investments of Qualified Domestic Institutional Investors and the rules thereunder. The CSRC has issued the Interim Measures for Supervision over Risk Provisions of Publicly Offered Securities Investment Funds (Consultation Draft) and started the solicitation of public comments. The CSRC has released the Interim Rules on Securities Investment Fund Custody Business of Non-Bank Financial Institutions, which will come into effect on June 1 2013. The CSRC has released the Interim Administrative Rules for Securities Investment Fund Sales Institutions Business Operations via Third Party E-commerce Platforms. The CSRC has issued the Administrative Measures for the Sale of Securities Investment Fund as revised and the rules thereunder. The major changes include clarifying and specifying the details of the standard of judgment of major administrative sanctions, fostering capital Shanghai Stock Exchange www.sse.com.cn 6
monitoring mechanism and ensuring the security of fund sales settlement capital. The CSRC has started the solicitation of public comments on the Administrative Rules on Equity Incentive Programs of Securities Companies (Consultation Draft). 5. QFII, RQFII & QDII As of Mar. 31 st, 2013, the approved quota for QFII, RQFII and QDII were USD 41.75 billion, USD 11.11 billion and USD 84.13 billion respectively. The newly approved quota for QFII in March 2013 is USD 0.9 billion. On the other hand, the quota for QDII was reduced by USD 1.0 billion. Shanghai Stock Exchange www.sse.com.cn 7
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