Institutional investors can do a better job in the guidance of value investing and the promotion of corporate governance. More efforts should be made to give full play to their role in the blue chip market, said Vice President Xu Ming of the Shanghai Stock Exchange (SSE) at the "2nd Global Summit on Fund". Xu said that sound-management-featured market participants are crucial to the safe operation and functioning of the capital market. Institutional investors have developed into a major force in the capital market. Their growth will play a fundamental role in perfecting the operational mechanism in the financial market as well as creating the healthy and mature investment culture. Statistics showed that by the end of 2011, professional institutional investors had held 15.7% of the total stocks in the securities market. "Outstanding progresses have been made in terms of the size and products of China's financial institutions as well as the market share of institutional investors. However, compare with those in mature markets, we have witnessed sizeable gaps as regard to the investment proportion of institutional investors in the domestic capital market and the involvement of long-term funds in the market. Multi-endeavors should also be made to encourage the growth of investors, especially institutional investors, increase their investment proportion in the capital market and spur the involvement of long-term funds in the capital market", said Xu. Xu held that institutional investors could guide value investing and long-term investment and create a healthy investment culture. According to statistics, the proportion of large-cap blue chips' market value exceeds 80% in institutional investors' portfolios. Xu held that with their advantages in funds, research and technologies, institutional investors could make more rational decisions and explore the targets with long-term investment values. Instead of frequent transactions for profits, institutional investors tend to conduct steady investing behaviors and hold stocks for a long time, which could effectively alleviate the stock price fluctuation caused by unreasonable transactions. Besides, Xu stressed that institutional investors are of great significance to perfecting the governance of listed companies. Specifically, institutional investors could urge listed companies to consummate the structure of corporate governance and the level of corporate governance by exercising shareholders' rights, supervising and stimulating corporate management teams, as well as constraining controlling shareholders' behaviors. Xu said that in China, institutional investors could involve themselves into corporate governance in addition to boosting the building and perfection of corporate power balance mechanisms in a variety of approaches. For instance, they could exercise voting rights against insiders' control in companies, indirectly or directly affect corporate managers' behaviors, urge the establishment of reasonable remuneration system, propel more scientific decision-making of mergers and acquisitions, attach importance to social responsibilities, drive more standardized information disclosure, put higher requirements to intermediaries such as securities companies, accounting firms and rating agencies for indirectly fueling corporate governance, as well as pushing forward the perfection of the market systems, investment environment and market rules. Xu also said that the SSE blue chip market would provide a vast space for institutional investors in light of their great role in the capital market. According to the strategic arrangement and deployment made by Shanghai for building an international financial center, the SSE, in the market-oriented principle, is forging an integrated market composed of the crucial blue chip market, the bonds market, the funds market and the derivatives market by optimizing services and pursing innovation, with an aim of providing a perfect platform for the investment of institutional investors in the securities market. On the other hand, the SSE will offer diversified products and services to value-oriented investors by innovating its products and trading systems. Xu introduced that SHSE-SZSE300 ETF, which was being issued, was not only a key product of the SSE, but also a sole cross-market product that had adopted the "T+0" subscription and redemption mechanism. The launch of SHSE-SZSE300 ETF, a major measure for boosting the building of the blue chip market and value investing, was very important for increasing incomes from long-term investment and improving the market efficiency. |