Securities regulator calls for policies to protect small investors
China should implement more policies to protect retail stock investors to ensure the healthy development of the country’s capital market, the head of the securities regulator said on Wednesday.
Retail investors with less than 500,000 yuan (HK$633,000) in investments account for about 60 per cent of total market transaction value, but they suffer from inadequate information disclosure by listed companies as well as illegal behaviour by some of them, Xiao Gang, the chairman of the China Securities Regulatory Commission (CSRC), wrote in the official People’s Daily.
“Protecting the interest of small investors has been a key hurdle of the development of the capital markets,” he said.
The government needs to protect investor rights to access information, improve the decision-making mechanism and shareholders’ voting at listed companies, open various channels to solve disputes and improve the compensation mechanism for small investors, Xiao said.
The CSRC has been stepping up efforts to restore investor confidence in the market. It has been clamping down on insider trading and has frozen initial public offerings for more than a year to ensure the quality of companies listing on the Shanghai and Shenzhen stock exchanges.
Xiao also said the government should work to quickly launch a planned pilot project allowing companies to issue preferred shares. Preferred stock is a class of equity that has priority over common stock when it comes to dividend payments and asset liquidation but ordinarily does not trade, carries no voting rights and does not dilute net profits attributable to other shareholders.