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China's A-share market had a hard time this year. The Shanghai market is down more than 20 percent and Shenzhen is down more than 30 percent. But it's also seen a number of significant structural improvements that bode well for the future.
From the MSCI's inclusion of A shares to the establishment of the science and technology innovation board, the A-share market is becoming more internationalized and streamlined.
One of the most significant progress has been the quicker IPO approval procedure that was set up for unicorn companies in March.
Foxconn Industrial Internet became the first beneficiary, taking only 36 days to gain its Shanghai listing. And while well-managed companies have been entering the market more quickly, problematic ones are being flushed out more quickly as well.
“The A share market has entered a long-expected period -- companies keep coming in and also leaving,” said Yang Zhongning, Investment Consultant of Industrial Securities, “and since the total number of companies listed on the A-share market now exceeds 3,000, some companies' leaving will benefit the overall market.”
VCG Photo
Despite improving things at home, China also welcomes more foreign investors. Chinese large caps were included in the MSCI global and regional indexes in June. The FTSE Russell Index also announced in September it will be including Chinese mainland shares in its major benchmarks beginning in June next year.
“These important milestones not only important for Chinese market but also for international investors in general,” said Theodore Shou, chief investment officer of Skybound Capital.
Besides, China's regulators also said that the science and technology innovation board will open next year. Its registration-based system will ensure a much more simplified IPO process for companies meeting basic qualifications.
“We definitely are very optimistic that the further openness of the Chinese market is making it a better market. Not necessarily a more profitable market for retail investors but at least is going to be a very good market and that's what we would like to see,” said Shou.
（CGTN）
