By Zhong Zheng

China Securities Journal (23 March 2012)

CSRC Chairman Guo Shuqing led a field survey to Zhejiang Province from March 18 to 20, to learn the latest progress of an overhaul among varied trading venues. Apart from visiting futures firms and securities companies, Guo also met with some representatives of individual and institutional investors at a branch of Hangzhou-based Caitong Securities. 

Chairman Guo began the meeting by saying with a smile that “we are here to learn. You may say whatever you want. It does not matter if you criticize me”. His opening remarks eliminated investors’ worries and concerns. Investor representatives actively voiced their views, putting forward opinions and suggestions on such issues as stock recommendation in media, listed companies’ dividend distribution and services, protection of investors’ interests, investment instruments, securities taxes and trading rules. A retired woman with 20 years’ investment experience said that now the media, particularly radios, had stock recommendation programs that mislead small and medium investors, especially new market entrants, with false information, thus she suggested tightening punishment over illegal advisory services and the so called “Black Mouths”, which refer to stock market manipulators who talk up stock prices that they have taken stakes in. Two individual investors with 8 and 10 years’ investment experience talked about many listed companies’ inadequate services to small and medium investors, such as skimping on their answers to phone calls or even no answers at all; small and medium investors could not exercise their rights as shareholders, for example, they receive little attention when visiting listed companies and have no chance to meet their executives; their requests for a field visit to listed companies are often denied for various excuses; the shareholders’ meeting is just a formality, with only half an hour left for shareholder Q&A, during which small and medium investors have no chance to put forward even a single question. The meeting of some listed companies even last for only half an hour. They suggested listed companies designate an open day for small and medium investors, regularly receive their visits, answer their queries seriously and treat them with equality. The head of an investment institution said that the present stock market lacks of investment instruments and innovation, thus he suggested accelerate innovation of capital market products, speed up the rollout of T-bond futures, stock futures and other financial derivatives, accelerate the development of the exchange-traded bond market and increase the liquidity in the bond market. An investor with formal occupation as a doctor complained that individual investors lack remedy channels when their interests are hurt, such as unsmooth consulting or complaint channels and long-pending periods. He suggested the CSRC establish a mechanism protecting investors’ interests, smoothen remedy channels and protect the interests of small and medium investors in accordance with law. Two full-time investors pointed out that securities firms now offer limited wealth management products and services to investors, thus suggesting accelerating development of securities firms, improving their service quality and offering customized products or medium to high end wealth management services to particular groups of investors. Many investors who mentioned the heavy tax burden in the current securities market that drives up the investment cost of small and medium investors suggested eliminating dividend tax or replacing the existing turnover tax with capital gain tax. In addition, investors also provided suggestions on issues such as ex-dividend and ex-right, allowing securities practitioners to invest in stocks and stepping up education and supervision of intermediaries and institutional investors.

At the meeting, Chairman Guo not only listened carefully, but also interacted with investors. He asked “how do you invest? What experience have you learnt?”, “is it convenient to attend shareholders’ meeting?”, “do you invest in concept stocks?”, “do you speculate IPO shares?” etc. He also made in-depth communication with investors on innovation of investment instruments, quality of issuers and services of listed companies. He said that the CSRC is not afraid of criticism, it hopes to hear more investors’ voices and commits to protect investors’ legitimate rights. With respect to the investors’ feedbacks, Chairman Guo stated, the CSRC was actively studying such new products as treasury bond futures and SME private placement bonds to diversify the investment products; the dividend distribution by listed companies was decided by the companies on an independent basis. The regulatory authorities encouraged the listed companies to establish a continuous, clear and transparent decision-making mechanism and dividend distribution policy, and listed companies shall provide reasons for not distributing dividends to investors; regarding the taxation on the securities market, active communication was being made with relevant authorities; when hearing that some investors said the radio programs recommended stocks in a deceptive and misleading manner, phone calls to listed companies could not get through and small and medium shareholders could not visit listed companies, he immediately instructed his staff to keep records and verify the relevant matters for handling as soon as possible. Meanwhile, Chairman Guo stressed that the regulatory authorities attached great importance to the protection of investors, thus the public was repeatedly reminded of not making speculations in new, small-cap and bad-performing stocks. And the investors must understand that “investor protection does not guarantee profit-making”, “the investors must know clearly where their losses lie in” and “the investors must have their own risk judgment, build up the value investment concept and cultivate a healthy investment habit”. When the seminar came to its conclusion, Chairman Guo asked his staff to leave the participating investors with the CSRC’s telephone number, website address and other means of contacts for further communication.

The participating investors said, they were so impressed that Chairman Guo paid keen attention to the investors and had face-to-face communication with them just after the NPC and CPPCC sessions ended. The representatives of other institutions present also said, they were greatly encouraged by the leaders of the CSRC for communicating with the public in a sincere, approachable and down-to-earth way, without shunning problems Such move strengthened public confidence in the securities market and their expectation for a more splendid future in China’s securities market.