"It is high time unveiling the financial derivatives market."
This is what Cheng Siwei, vice chairman of the Standing Committee of the National People's Congress, was quoted as saying on Saturday. He suggested the opening up of markets in stock index, interest rates, foreign exchange and fixed income futures once the market conditions are met. But the conditions of what he outlined are unclear. Does that mean investors have to wait until real estate and equity markets slowdown or sometime even further in the future (when China's financial markets are akin to the West?)
One of the reasons this idea was brought up in the first place was because of all the problems that currently exist in Chinese markets. For example, the efficiency of equity markets in China is significantly lower than that of developed nations. Moreover, the per-capita profit of Chinese financials are low and not yet in line with, say, Western Europe countries.
Cheng believes that by building a financial infrastructure for derivatives, this will increase China's market efficiency and risk capacity, hence improving international competitiveness. What do you think?
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