(MENAFN- Qatar News Agency) China may reduce the influence of the state on stock markets as part of its sweeping reform agenda, including by making it easier for companies to list their stocks and making management of state-owned enterprises more accountable to shareholders. In a pointer to a winding back of government influence in initial public offerings (IPOs), detailed plans released on Friday night included a pledge to "push forward stock issuance registration system reform" - a term previously used to refer to the listing process. In developed economies, the process largely requires a company to register and go through a rigorous audit before investors make a decision on whether or not to buy the stock. To list in China requires the approval of the China Securities Regulatory Commission (CSRC). An early test of the leadership's commitment to reform will be if it lifts a year-long suspension of new listings in Shanghai and Shenzhen.
While the stated reason for the de facto ban was to clean up fraud by forcing underwriters review the accuracy of IPO applications, it was widely understood to be an effort to prop up the chronically weak stock market by restricting new shares. Lifting the suspension would be a signal that policymakers are willing to cede more control to markets. Analysts welcomed the plans, but cautioned they still had to be implemented. "A policy document, however weighty and well put-together, does not in itself change anything on the ground," said Mark Williams and Wang Qinwei in a research note. "We have heard loud call for reform before. It is not just the speed of reform implementation that matters, but the sequencing."
The government also wants to encourage increased equity financing, which would help wean Chinese firms off an their overdependence on bank loans for funding. Corporate debt in China has exploded since the global financial crisis, and Fitch estimates that the economy-wide debt-to-GDP ratio will reach around 218 percent of GDP by the end of 2013, up 87 percentage points since 2008. In July, the IMF warned similarly rapid debt run-ups have been associated with financial crises in other countries.
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SINGAPORE: A co-founder of China's biggest Bitcoin exchange on Friday said there were "boundless opportunities" for the digital currency in the country because of the Chinese saving ethic. "The main reason why Bitcoin has become big in China is because Chinese people are savers, and more people are seeing Bitcoin as a way to store and invest their money," Linke Yang, vice president of BTC China, told AFP on the sidelines of a conference in Singapore. "There are boundless opportunities for BTC China and Bitcoin in the next five years, you never know with the way the Internet develops," Yang said through an interpreter. Bitcoins, a form of digitally created "e-money" which is stored in a virtual wallet and bypasses banks, allowing users to remain anonymous, has soared in value in recent months. They were created in 2009 in the aftermath of the global financial crisis by an anonymous programmer who wanted a currency independent of any central bank or financial institution.
The price of a Bitcoin on BTC China, which is available only to Chinese traders, is currently at 2,647.90 yuan ($26.46), surging nearly 100 percent from its price in late October. It handled 434,349 Bitcoin exchanges and had 33.68 percent of the global bitcoin exchange market share over the last seven days, according to market tracking website Bitcoinity.org. Yang attributed the sharp rise in Chinese demand for Bitcoins to a documentary on Bitcoins broadcast on the state-run China Central Television (CCTV), as well as increased acceptance of the crypto-currency as an investment instrument. Yang, who co-founded the firm in 2011, brushed off concerns that the virtual currency could be used for illicit purposes because of its anonymous nature, or could be targeted by hackers. "We are the first Bitcoin exchange in China, and we have the trust of our users who have been with us for two years and who know we have a strong system in place," Yang said.
"We focus on our own growth in China, and not on the negative news surrounding Bitcoin."
Other participants at the Bitcoin Singapore conference echoed Yang's bullishness on the digital currency's prospects in China. "The 'yuppies', or upper middle-class in China will drive demand for Bitcoin especially with the amazing uptake of e-commerce going on now," said Zennon Kapron, a Shanghai-based managing director of Kapronasia, a financial consulting firm. Investors however are closely watching to see if the Chinese government will place specific restrictions on Bitcoin trading, he told AFP.
China's central bank is wary of virtual currencies, raising the alarm in 2007 over their potential use in online gambling and money laundering. The Chinese government has banned the trading of virtual currencies in online games to prevent potential risk to economic and financial order, according to a government notice. Hundreds of Chinese investors were left with more than 20 million yuan in combined losses after Global Bond Limited, a Bitcoin trading platform, suddenly closed in October, a newspaper reported Thursday. Beijing keeps a tight grip on the domestic yuan currency, worried about potential disruption of the economy by sudden outflows and inflows of funds.
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