2015/7/5 The chinese characteristics More About Chinese Characteristics For chine (Some say that none financial theory in the Are financial markets all the same over the world? text book holds in Chinal) re there any "types"of financial markets? Can we talk about financial markets without Are Chinas financial markets special? Why or why mentioning the economic reform Can we talk about the financial markets How did the China's financial markets evolve in the transition from a planned economy to t ithout mentioning the legal environment? market economy? How do we predict the future arket without putting it in a globa How Do We Learn About the How Do We learn about the Chinese Characteristics? Chinese Characteristics? What are these in China? By supplementary readings and anecdotes in PBoC. CSRC. CIRC. CBRC. SAFE MOF ABC, ICBC, CBC, BOC, BoCom, AMC Do you know the background of all these? hanghai Stock Exchange, Shenzhen Stock 5.21 soaring(growing by xchange, SME Board, GEM Board 1994: RMB managed floating Tradable shares and non-tradable shares 1995: 327 T-bill Futures Event orporate bonds, debentures 1998: RMB pegged Dim sum bond, Panda Bond 2005-2006: State-owned commercial banks No textbook on these is available so far! listed in Shanghai and Hong Kong How Do We Learn about the Chinese Characteristics? Combine the all Do you know the background of all these? In mid 2007, Jack sold his house in California 2005: Reform of non-tradable shares or $0.5 million, and bough an apartment in 2005: RMB back to managed floating Beijing, which cost RMB 3 million($0. 4 million 007: 5.30 stamp tax doubled quivalent, exchange rate 7.5) 2010: Stock index futures launched 2013: lending rate floor removed -2013: T-bill Futures trading restarted 2014: Shanghai Hong Kong Stock Connect 2015: stock market collapse2015/7/5 5 The Chinese Characteristics • For Chinese Financial Markets – Are financial markets all the same over the world? – Are there any “types” of financial markets? – Are China’s financial markets special? Why or why not? – How did the China’s financial markets evolve in the transition from a planned economy to the market economy? – How do we predict the future? 0-25 More About Chinese Characteristics • (Some say that none financial theory in the text book holds in China!) • Can we talk about financial markets without mentioning the economic reform? • Can we talk about the financial markets without mentioning the legal environment? • Can we understand the Chinese financial market without putting it in a global background? 0-26 • What are these in China? – PBoC, CSRC, CIRC, CBRC, SAFE, MOF – ABC, ICBC, CBC, BOC, BoCom, AMC – Shanghai Stock Exchange, Shenzhen Stock Exchange, SME Board, GEM Board – Tradable shares and non-tradable shares – Corporate bonds, debentures – Dim sum bond, Panda Bond • No textbook on these is available so far! How Do We Learn About the Chinese Characteristics? 0-27 How Do We Learn About the Chinese Characteristics? • By supplementary readings and anecdotes in the market • Do you know the background of all these? – 1992: “5.21” soaring (growing by 105.5%) – 1994: RMB managed floating – 1995: 327 T-bill Futures Event – 1998: RMB pegged – 2005-2006: State-owned commercial banks listed in Shanghai and Hong Kong 0-28 • Do you know the background of all these? – 2005: Reform of non-tradable shares – 2005: RMB back to managed floating – 2007: “5.30” stamp tax doubled – 2010: Stock index futures launched – 2013: lending rate floor removed – 2013: T-bill Futures trading restarted – 2014: Shanghai Hong Kong Stock Connect – 2015: stock market collapse How Do We Learn About the Chinese Characteristics? 0-29 Combine the All • In mid 2007, Jack sold his house in California for $0.5 million, and bough an apartment in Beijing, which cost RMB 3 million ($0.4 million equivalent, exchange rate 7.5). 0-30