April 10, 2009. CLFC -- The future development of China's capital market was the main thrust of a speech by Prof. Wang Guogang, Deputy Director General of the Institute of Finance & Banking at the Chinese Academy of Social Sciences (CASS), when he spoke at today's 18th CEIBS Lujiazui Finance Salon.

Prof. Wang Guogang

During his keynote speech entitled "China's Stock Market: Retrospect and Prospect",  Prof. Wang shared his insights with CEIBS alumni and more than 80 senior executives from various financial institutions.

Beginning with an analysis of the performance of China's A-share market in 2008, Prof. Wang pointed out that from January to November 2008, this market tended to trend downwards -- with the Shanghai Index even falling to around 1,700 points. This was 65% lower than 2007's peak of 6,124 points. This decline meant that, except for Russia's, China's stock market fell the sharpest among global bourses in 2008.  As a result, both the financing scale and the trading volume shrank abruptly for this market.

Prof. Wang believes these changes in the performance of China's economy and stock market would have occurred even if the U.S. financial crisis -- which has spread to the rest of the globe -- had not occurred. He pointed out that the direct cause of the decline in A-share prices was an imbalance in the supplies of capital and stock -- an insufficient capital supply tends to result in falling stock prices.

According to Prof. Wang, in 2009 China's stock market will experience some volatility; however the overall trend will be upward movement. He noted, "If China's economy continues to grow appropriately, with various measures put in place gradually and effectively, the stock market will probably go up in 2009, the performance of listed companies would improve, and the capital supply of the stock market would also increase."