c.2013 New York Times News Service
c.2013 New York Times News Service
HONG KONG — China may be the world’s fastest-growing major economy, but it can also lay claim to a more dubious superlative: home of the worst-performing stock market in Asia.
The slump comes despite signs that China’s policymakers have been acting to rejuvenate the country’s languid financial markets. On Tuesday, five companies announced they had received approval to conduct public share offerings — the first batch of deals to be approved since regulators announced on Nov. 30 that they would resume share sales after a yearlong ban.
The lackluster performance of China’s domestic stock markets also comes in sharp contrast to the United States, where both the Dow Jones industrial average and the S&P 500 have in the past year overtaken their peak levels before the financial crisis to set record highs. The Shanghai index, by contrast, is trading at slightly more than a third of its value at its 2007 peak, when it reached 6,092.06 points.
Shanghai’s stock market came in last place among Asian markets in 2013. Its performance was slightly worse than the 6.7 percent annual decrease in the main share index in Thailand, where street protests have been disrupting the nation’s capital for weeks.
The only other Asian market to see a decline for the year was Indonesia, where the main index finished down 0.98 percent from a year earlier as investors grew concerned over lofty stock valuations amid signs of slowing growth.
All other Asian indexes rose in 2013, led by Japan, where the benchmark Nikkei 225 share index rallied 56.7 percent for the year, its biggest annual gain since 1972. Shares were bolstered by a weaker yen and hopes for Prime Minister Shinzo Abe’s bold economic and monetary policies.
China’s market slump has taken shape over a comparatively long horizon due to a number of factors.
Domestic shares are still mostly off limits to foreign investors. China’s largely closed capital account means Chinese savers have few options for investing their money; property and stocks have been the traditional favorites.
But since a robust rebound in 2009, China’s stock markets have been stuck in a downward spiral, leaving many investors disheartened. The Shanghai index saw trading volumes decline for three straight years, from 2010 to 2012.
Many ordinary Chinese have instead invested their money in recent years in wealth management products. These securitized debt instruments pay much higher interest rates than bank deposits but, as loosely regulated products of the country’s murky shadow banking sector, they tend to offer minimal disclosure and entail significantly greater risk.
Still, moves by Chinese policymakers in the year since President Xi Jinping came to power have given investors cause for encouragement. A key plenum of the Communist Party leadership in November concluded with pledges that would represent China’s most significant financial overhauls in decades.
Following that meeting, the securities regulator announced on Nov. 30 a series of new policies designed to strengthen investor protections and corporate disclosure requirements, as well as to resume share sales. China’s domestic markets have not seen an initial public offering since October 2012.
Chinese IPO’s appear on track to resume in early January. On Tuesday, five companies announced to the Shanghai and Shenzhen stock exchanges that they had received approval to conduct share sales. They include Guangdong Qtone Education Co., Guangdong Xinbao Electrical Appliances Holdings, Neway Valve (Suzhou) Co., Truking Technology Limited and Zhejiang Wolwo Bio-Pharmaceutical Co.
All five companies intend to list in January, the first among a backlog of about 760 firms waiting to sell shares in China.