Chinese benchmark index today closed at 2,249.11 points, breaking the record
in history that was created more than five years ago.
The benchmark Shanghai Composite Index that covers both A- and B-shares rose
1.15 percent to close at 2,249.11 points on Thursday afternoon, marginally
higher than the 2,245.43 points recorded on June 13, 2001.
Soon after the index reached 2,245 points in 2001, Chinese stock market
entered into a four-year-long bearish period, with the index once dropping to
998 points in 2005.
So as to revive the stock market and bring back confidence to investors, the
Chinese government has launched a reform since last year to end the problem of
split share structure.
The split share structure, referring to the existence of both publicly-owned
tradable shares and a large volume of state-owned non-tradable shares, was
regarded as a major factor leading to the four years of bearish activity on the
market.
To make all their shares tradable, listed companies undergoing reform have to
offer additional shares or funds to private investors as compensation for
potential losses in the value of their portfolios when the publicly-owned shares
hit the market.
The reform has been viewed by the regulator and investors as vital for the
capital market to function as an open and fair market for both majority and
minority public shareholders.
In the past year, the Chinese stock index rebounded by about 100 percent,
thanks to the sweeping share reform and other institutional changes that
enhanced the supervision over listed companies.