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What have investors ’ behavior and information disclosure revealed?

What have investors ’ behavior and information disclosure revealed?. Song Liping July 2008. Foreword. It is vitally important for us to protect investors’ interests. ——www.csrc.gov.cn Protection of investors’ interests is protection of Wall Street. ——Wall Street

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What have investors ’ behavior and information disclosure revealed?

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  1. What have investors’ behavior and information disclosure revealed? Song Liping July 2008

  2. Foreword • It is vitally important for us to protect investors’ interests. ——www.csrc.gov.cn • Protection of investors’ interests is protection of Wall Street. ——Wall Street • Regarding the Pain of Others，do we have sufficient power to sustain？ ——Regarding the Pain of Others Susan Sontag

  3. Contents Current Condition 1：Analysis of investor structure Current Condition 2：Analysis of investor behavior Current Condition 3：Test Analysis of Investor pressure Current Condition4：Analysis of Annual Reports of Listed Companies on SZSE SZSE’s Work

  4. Current Condition 1：Analysis of investor structure • 1. A-share trading and newly-opened accounts on SZSE, year 2001-2007 Source：Shen Zhen Stock Market Investors Structure and Behavior, Year 2007, Financial Innovation Lab. and Research Institute , SZSE

  5. Current Condition 1：Analysis of investor structure 2. Age Distribution of A-share traders 2005~2007 Note：all the ranges are righ-open，e.g. , range 40~5 0includes 40 Source：Shen Zhen Stock Market Investors Structure and Behavior, Year 2007, Financial Innovation Lab. and Research Institute , SZSE

  6. Current Condition 1：Analysis of investor structure 3. Trading account and trade distribution Source：Shen Zhen Stock Market Investors Structure and Behavior, Year 2007, Financial Innovation Lab. and Research Institute , SZSE

  7. Current Condition 1：Analysis of investor structure 4. Investors 'age and trading history

  8. Institutional Large cap High trading price Good earnings Low PE Non-ST Substantial price hike in the previous period （6 months） Investors valued less than 1 million yuan Small-cap Low price Low earnings High PE ST shares Low price hike in the previous period Current Condition 2：Analysis of investor behavior 1.Investors’ portfolio and trading preferences

  9. Current Condition 2：Analysis of investor behavior 2. Investors’ Average Holding Period （2） Investors’ length of stock holding (days） （1）Investors’ length of stock holding (%) Source：Shen Zhen Stock Market Investors Structure and Behavior, Year 2007, Financial Innovation Lab. and Research Institute , SZSE

  10. Current Condition 2：Analysis of investor behavior 3. Investors’ trading frequency and capital turnover Source：Shen Zhen Stock Market Investors Structure and Behavior, Year 2007, Financial Innovation Lab. and Research Institute , SZSE

  11. Current Condition 2：Analysis of investor behavior 4. Investors’ trading performance Performance by Investor Type ( 10,000 yuan) Performance by Investors’ trading history Source：Shen Zhen Stock Market Investors Structure and Behavior, Year 2007, Financial Innovation Lab. and Research Institute , SZSE

  12. Current Condition 3：Test Analysis of Investor pressure Based on Feb 25 values, suppose the index fell 0%, 10%, 20%, 30% , the would-be gains and losses for investors: Source：Shen Zhen Stock Market Investors Structure and Behavior, Year 2007, Financial Innovation Lab. and Research Institute , SZSE

  13. Current Condition 4：Analysis of Annual Reports of Listed Companies on SZSE More qualitative analysis, less quantitative analysis; more display of numbers, less analysis and explanation; Absent of disclosure of senior manager and supervisors’ salary; Earnings forecast delayed and inaccurate; Independent directors’ reports are trite and insubstantial. Disclosure of Internal control tends to superficially comply with forms and norms. Inaccurate or incomplete disclosure on the de facto controlling shareholder Less-than -expected observance of new accounting standards.

  14. From status quo to a better world Small and medium individual investors are the bulk of the investor population and provide most of the market liquidity. Small and medium investors tend to have high trading frequency, common style of investment and low investment returns. Close attention must be paid to systematic risk thus accumulated. Strengthen investor education and increase risk awareness in investors. Strengthen innovation in products and institutions, improve market liquidity and establish multiple channels of investment. Strengthen categorical trading account management practice and reinforce SZSE members’ trading management function. Improve quality of information disclosure and protect investors’ right to know.

  15. SZSE’s Work The multiple dimensions of investor protection determines its complexity and systematic nature. Depositary and clearing institution Fund for protection of investors’ interest Supervisory Institutions Fund companies Listed companies Securities firms Intermediary institutions Stock exchanges Relationship with the trading entity Natural person/legal entity Client Trading entity Financial products/services consumers Shareholder Debt claimant Investors’ Identities

  16. SZSE’s Work Protecting investors’ interests as … Trading entities Consumers of financial products and services. Shareholders and debt claimants Natural persons and legal entities Clients of securities firms

  17. Thank you

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