Liu Shiyu: The Fundamental Issue Of The Stock Market Is The Key.

We always look forward to trusting the chairman of the SFC, but we also know that the problem of China's stock market is not to change the chairman frequently, but that the long-term development problem can not be solved for a long time.

We understand that the short and long term problems in China's stock market are intertwined, the short-term means can not be solved, the short-term problems can not be solved, and the long-term problems can not be solved.

What do I do? I believe that in the long run or short term, China's stock market reform must grasp the core issue.

What is the core issue? The reconstruction of the pricing mechanism.

Why does pricing failure occur?

"Fairness and efficiency" is seriously missing.

Typical characteristics are unfair position in the one or two level market, unfair position of institutional investors and retail investors, lagging behind in information disclosure, unfair competition between insider traders and general market investors, etc. the lack of efficiency is reflected in the adverse selection of market, and the price of bad corporate capital is better than that of a good company, which makes stock price lose the basis of value judgement.

Why is "fairness and efficiency" seriously missing?

They believe that in the socialist market economy, we must take "public" as the first priority, the interests tilt the enterprises, and ignore the private investors, and basically lose the relativity between "public" and "private".

The typical characteristics lie in the market interest being tilted to the primary market, and the mechanism of serious shortage of supply in the stock issuing market is constructed, so that capital pricing in the primary market is too high, which seriously infringes on the interests of investors in the two tier market. Relatively speaking, it is precisely because the primary market seriously overdraws the value of capital that the two level market investors can not engage in long-term investment at all, but take stock as a gambling device, which is why the Chinese stock market is similar to a casino.

What causes the distortion of trading mechanism?

The construction of China's stock market started at the beginning to solve the problems of state-owned enterprises' system and mechanism.

But now that the situation has changed, the continuation of the past trading mechanism will not only help the health of China's economy and stock market, but turn the stock market into a "profiteering arena", thereby harming the development of the real economy.

For example, as long as the listing is successful, we can get the reality of profiteering, making a large number of enterprises listed on the market.

The problem of creating value results in a huge decline in performance after the listing of the company, especially managers' agitation, because they understand that it is impossible to achieve the expected performance expectations of investors when they complete the listing, and they have made money that they can't spend all their lives. Why should they work so hard that they can walk away, as long as they can cash their fortune away.

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Are there such cases? How many companies in such a market deserve investors to invest for a long time?

Why is there a serious imbalance between supply and demand in the primary market?

The first day of the IPO listing is near the issuing price, and the new stock holders are reluctant to sell, and investors who want to buy can not buy it, thus constructing a market structure which is in short supply, so the share price is soaring and misleading the market sentiment. When the new stock holders are willing to sell and reach the balance between supply and demand, the investors in the primary market make big profits, while the two level market investors take over the huge risk -- the stock that is seriously overvalued, and can only expect the dealer to further push it up.

Therefore, we say that China's stock market is not a problem of incomplete legal system and inadequate supervision, but a wrong result of wrong trading mechanism.

Under the wrong trading mechanism, regulation will fail and the law will be invalid.

Therefore, President Liu Shiyu's key task is to reorganize and reform all the trading mechanisms of the one or two level market in China's stock market according to the principle of "fairness and efficiency", and reorganize and reform China's regulatory body system and mechanism according to the principle of "protecting the legitimate rights and interests of small and medium investors".

I think a systemic operation is necessary, not a headache.