2016/10/12 Third Stage: 19992008 Third Stage: 1999 2008 · Close-end funds The normal buying or selling of treasury bonds with a close end fund has a fixed number of fund shares ed-end funds Treasury bond: repurchase exchange and can be bought and sold on that exchange. Close-end funds usually turn open when the pre-set existing period is due The repurchase p liquidity of TBs and reflects the short-tem interest rate Products of 7-day, 13-day, 28-day, 91-day and 182-day An open -end fund does not have restrictions on the mount of shares the fund will issue itutions use repurchases for short-term financing Most of the open end funds in China are not listed in stock xchanges, but can be bought and sold in banks or website of fund companies Third Stage: 1999 2008 Third Stage: 1999"2008 ETF(Exchange-traded funds) Warrants An ETF is an investment(open-end)fund that a warrant is a security that entitles the holder to buy tracks an index, a commodity or a basket of assets the underlying stock of the issuing company at a fixed but trades like a stock on an exchange. exercise price until the expiry dat ETEs are attractive as investments because of their Warrants can be attached to bonds or preferred stocks low costs, tax efficiency, and stock-like features. or be detached and traded separately Investors can only buy or sell the ETF with the Warrants are issued by private parties, typically the erying corporation on which a warrant is based, but can also The minimum of trading amount is 100 thousand be issued by security firms Warrants in China was promoted in 2005 as one First ETE. SSE 50 ETE. was launched in 2004. approach of integrating the tradable and non-tradable shares Third Stage: 1999 2008 Third Stage: 1999-2008 ST(Special Treatment S: stocks that have not started the reform on non- tradable shares listed firm with abnormal financial status SST: poor performing stocks that have not started the g loss for late two than its book value of equity in the past year reform on non-tradable shares limit-up and limit-down set at 5% *ST: stocks that have made negative net profit for ST: makes loss for 3 consecutive years, in the risk of onsecutive 3 years, in the risk of cease listing delisting SST: stocks that have not started the reform on non- tradable shares and in the risk of cease listing Delisting: adopted since Feb 25th, 2005; stocks of very poorly performing firms are not allowed to be traded in the stock exchange 102016/10/12 10 Third Stage: 1999~2008 • Treasury bonds: cash – The normal buying or selling of treasury bonds with cash • Treasury bond: repurchase – The seller “sells” the bonds and guarantees to buy them back at a given price in the future – The repurchase provides liquidity of TBs and reflects the short-tem interest rate. – Products of 7-day, 13-day, 28-day, 91-day and 182-day repurchases are available in China. – Institutions use repurchases for short-term financing.3-55 Third Stage: 1999~2008 • Close-end funds – A close-end fund has a fixed number of fund shares. – Closed-end funds are usually listed on a recognized stock exchange and can be bought and sold on that exchange. – Close-end funds usually turn open when the pre-set existing period is due. • Open-end funds – An open-end fund does not have restrictions on the amount of shares the fund will issue. – Most of the open-end funds in China are not listed in stock exchanges, but can be bought and sold in banks or website of fund companies. 3-56 Third Stage: 1999~2008 • ETF(Exchange-traded funds) – An ETF is an investment (open-end) fund that tracks an index, a commodity or a basket of assets but trades like a stock on an exchange. – ETFs are attractive as investments because of their low costs, tax efficiency, and stock-like features. – Investors can only buy or sell the ETF with the underlying basket of stocks. – The minimum of trading amount is 100 thousand shares. – First ETF, SSE 50 ETF, was launched in 2004. 3-57 Third Stage: 1999~2008 • Warrants – A warrant is a security that entitles the holder to buy the underlying stock of the issuing company at a fixed exercise price until the expiry date. – Warrants can be attached to bonds or preferred stocks or be detached and traded separately. – Warrants are issued by private parties, typically the corporation on which a warrant is based, but can also be issued by security firms. – Warrants in China was promoted in 2005 as one approach of integrating the tradable and non-tradable shares. 3-58 Third Stage: 1999~2008 • ST(Special Treatment) – Adopted since April 22nd 1998 by both SSE and SZSE, for listed firm with abnormal financial status – Standard: making loss for late two years; or net asset lower than its book value of equity in the past year – limit-up and limit-down set at 5% • *ST : makes loss for 3 consecutive years, in the risk of delisting • Delisting: adopted since Feb 25th, 2005; stocks of very poorly performing firms are not allowed to be traded in the stock exchange 3-59 3-60 Third Stage: 1999~2008 • S: stocks that have not started the reform on non￾tradable shares ； • SST: poor performing stocks that have not started the reform on non-tradable shares • *ST: stocks that have made negative net profit for consecutive 3 years, in the risk of cease listing • S*ST: stocks that have not started the reform on non￾tradable shares and in the risk of cease listing