As China's first college teacher to teach stock market investment, 25 years ago, Pan Fuxiang was excited as the number of companies listed on the country's A-shares market surpassed 3,000 for the first time on Friday.
"In hindsight, the development of the A-shares market in the past 26 years well echoed China's economic growth and reforms," said Pan, chairman of Nuode Asset Management, and visiting professor at Tsinghua University.
The first batch of listed companies, a total of eight, went public on the Shanghai Stock Exchange in 1990 when China was transforming from a planned economy to a market economy.
It was a pilot platform with imperfect designs, so only small and private companies would go public to seek financing, while big and state-owned enterprises (SOEs) that led the country's economic growth enjoyed financial support from banks, Pan said.
The A-shares market hit its first turning point in 1992 when the central government decided to establish a socialist market economy that encouraged joint-stock enterprises.
About 400 share-issuing firms were approved, and 37 companies were listed on the A-shares market that year. Nine SOEs became joint-stock companies and went public in Hong Kong and other markets.
Later the A-shares market met a wave of SOEs as China urged loss-suffering SOEs to seek changes via joint-stock reforms.
A total of 529 companies were listed on the A-shares market from 1997 to 2000, about 58 percent of them SOEs, such as industrial giants Baosteel, SAIC Motor and GD Power.
"The A-shares market in this period witnessed China's efforts to make up for missed lessons in the market economy in terms of commodity and production factors such as capital," Pan said.
The years from 2000 to 2010 saw more centrally-owned enterprises going public on the Shanghai and Shenzhen stock exchanges thanks to policy support, and the A-shares market experienced a bull run starting 2006 after the government moved to promote circulation of formerly non-tradable shares.
By the end of 2010, China had about 2,000 listed companies on the A-shares market, which had a comprehensive design to cater for the different financing demands of SOEs, small and medium-sized enterprises (SMEs) and startups, thanks to the introduction of the SME and ChiNext boards.
It took just six years for the A-shares market to see another 1,000 listed companies.
"The stock market has somewhat become a barometer of the Chinese economy, facilitating resource allocation, structural reforms and the rise of the new economy," said Gui Haoming, head of the research department with Shenwan Hongyuan Securities.
For example, the financial statements of listed firms in the third quarter showed that many firms in traditional sectors such as steel and shipbuilding are staging a comeback and startups are expanding, as the Chinese economy managed stable growth of 6.7 percent for the first nine months.
The veteran securities trader Shenwan Hongyuan expanded its research sectors from 23 to 28 with the rapid growth of emerging markets such as non-banking financial services.
However, the A-shares markets still has a long way to go as the real economy calls for more inclusive and market-oriented financing channels.
The government can set up more platforms on the A-shares market to allow startups in emerging sectors to go public, even if they are not making profits at present, said Jin Haitao, a senior member with the Asset Management Association of China, who believes this will help high-tech sectors grow faster.
Meanwhile, recent increasing stake buyouts by insurers have also raised concerns about hurting the structure and management of listed companies in the real economy, such as manufacturers.
"With better designs and regulations, the A-shares market should become more effective in the future in vitalizing the economy and improving industrial competitiveness," Pan said.
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