China's futures market will be developed actively, but with caution, while the planned introduction of index futures should not disturb the stock market's performance, said the China Securities Regulatory Commission's Chairman Shang Fulin yesterday during a forum.
"China will further diversify futures products and improve the risk control mechanism to create stable development in the futures market," Shang said during the 2007 China Finance Forum.
He also demanded adequate preparations for the launch of index futures, which has long been anticipated. It will allow investors to sell short on China's stock markets for the first time.
China has completed systematic and technical preparations for introducing index futures, Shang told Xinhua news agency in October.
However, the launch of index futures has been postponed several times due to worries over its influence on a stock market presently in a correction period, industry analysts said.
The index futures might be launched early next year, according to a research report published by the Shanghai Stock Exchange earlier this month.
Domestic stock markets should also prepare for more integration with international markets, Shang said.
"The ties between China's capital market and those elsewhere have become closer. China should improve the infrastructure of its capital markets to prepare for further integration," Shang said.
He said this includes the increase of direct capitalization and the establishment of a multi-layered market which offers diversified products.
China's double-digit economic growth in recent years and people's bulging interest in investments have fueled the expansion of the country's stock market.
By the end of November, the market value of the two mainland bourses in Shanghai and Shenzhen topped 29 trillion yuan (US$3.9 trillion), with about 136 million people holding accounts.
In the first eleven months, the daily turnover on China's stock market hit 193.4 billion yuan. Accumulated turnover on the futures market reached 643 million yuan during the same period.
(Shanghai Daily December 26, 2007)
