China Stock Market World's Third Largest Stock Market

January 15, 2007 11:10 IST
The yuan-denominated A-share market of China will become world's third largest stock market in the next ten years - after the stocks markets of United States and Japan, an expert from Goldman Sachs Group (Asia) Ltd. said.The market value of Chinese stocks will reach $5 trillion in 2016 and $10 trillion in 2020, equivalent to 70 per cent of the country's gross domestic product (GDP),

general manager of Goldman Sachs Group (Asia) Ltd., Hu Zuliu told the ongoing China Capital Market Forum in Beijing.

Compared with the major stock markets in the world, the A-share market in China is still small though it gained in size in 2006, Hu said.

China's bullish stock market saw total market value hit a record high of 10.25 trillion yuan (USD 1.31 trillion) on January 9, which was equivalent to 50 per cent of the country's GDP.

But the ratio of stock market value to GDP stands at 160 per cent in the United States and 124 per cent in India, Xinhua news agency reported.

Hu said China's capital market is hampered from expanding mainly because the banking sector predominates in the financial system and enterprises have long relied on bank loans in financing.

Chinese enterprises suffer from "complicated, over-elaborate and time consuming" formalities before being allowed to go public, which have made direct financing impossible for many of them.

Hu suggested China simplify these formalities to help meet enterprises' demand for funds and expand the capital market to encourage more enterprises to go public.

By Saniya Mehra