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Stocks' circuit breaker triggers call for changes [Copy link] 中文

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Post time 2016-1-6 09:29:48 |Display all floors
A stock indicator shows the benchmark Shanghai Composite Index on Jan 4, 2016. [Photo/IC]
The 7-percent dive in the value of Chinese stocks on Monday, the first trading day of the year, triggered the new circuit breaker mechanism that also came into effect that day.
The fall may be largely a result of knee-jerk worries about the imminent end of a ban on sales of shares by listed companies' major s ...

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Post time 2016-1-6 09:30:03 |Display all floors
Frankly China's stock markets are in a catch-22 situation and will remain so for the foreseeable future due to many factors including clarity and transparency of governing laws and often muddled and arbitrary practices of governance as well as clarity and transparency of corporate governance and practices among others. Thus, the stock market as a source of raising funds in China needs to take a different route and approach as I have suggested before. These routes and approaches include primarily bonds and preferred shares as they guaranteed fixed returns and principle. Of the two, I would highly recommend preferred shares as suggested in my SPS (Special Preferred Shares Scheme) Model, which is much more flexible than bonds. The SPS Model will also allow the government/s to completely exit ownership of enterprises (mainly SOEs, but still maintain leverage over them), which is essential (in my opinion) for enterprises to attract serious and long term private investments. To put the preferred shares on a par with bonds, laws can be amended to treat preferred shares' dividend payments to be taxed as expenses. This is a very small price to pay for the many benefits that the SPS Model will bring.

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