China is expected to officially launch its second board market this year to further expand its fledgling stock market, top economist Xiao Zhuoji said.
"Of course, I myself hope for an earlier establishment. But, anyhow, it may be set up within the year," said Xiao, who is attending the ongoing Fourth Session of the Ninth Chinese People's Political Consultative Conference (CPPCC) National Committee.
But he declined to give a specific timetable.
The economist acknowledged that there are still worries from both economists and government officials about high risks facing the second board market, but denied that preparation work is taking too long.
"The idea was raised more than a year ago. You should not forget that it took Hong Kong one and a half years to set up its second board market," Xiao said, referring to the Growth Enterprises Market (GEM) in the Hong Kong Special Administrative Region.
He expressed his confidence in the mainland's second board market, mainly for high-tech firms, while pointing to the "not-so-good" condition of the GEM.
There are now more than 70,000 high-tech enterprises on the mainland and about 2,000 to 3,000 are intending to go public in the new market, according to Xiao.
"The fact that we have so many candidates will guarantee that we choose the best out of the best for the incoming second board," he said.
The CPPCC National Committee delegate said the limited number of high-tech firms in Hong Kong and the influence of NASDAQ in the US had contributed to the unsteady performance of the GEM.
"But it can be assured that the mainland's second board market will be a stable once it is put into place. One main reason is that our capital market has yet to be directly integrated with the international one," Xiao said.
He pointed out that it is unlikely the second board would hit the main stock exchange markets in Shanghai and Shenzhen, at least in the initial stages.
"The main board will not be affected because the second market is of limited scale," Xiao said.
He said the second board will only divert individual bank savings and deposits into the new market.
(China Daily 03/05/2001)
