A vilified reporter points to immature stock market

• Source: Global Times
• [01:32 July 30 2010]
• Comments

By Wu Meng

It has been 20 years since the Shanghai and Shenzhen stock markets began listing Chinese company shares. Over the past two decades tens of thousands of Chinese companies went public and millions of ordinary people became major shareholders.

While China's stock markets have made major strides, there are many issues that illustrate their lack of ma-turity, and recent problems indicate a lack of supervision that leads to public mistrust.

On July 23, Qiu Ziming, a reporter with the Economic Observer newspaper, became wanted by the public security bureau of Suichang county, Zhejiang Province, on a charge of damaging a company's prestige and image. Qiu published a series of reports alleging insider trading involving Zhejiang Kan Specialties Material Co, a local paper manufacturer. The company claims that Qiu illegally published confidential information about their listed shares.

He then became a wanted man that fled to remain free.

Leaving aside the argument whether the information violated the company's privacy and confidentiality, the fact that a reporter could immediately become marked as a wanted suspect is worrying. The problem of information transparency - or rather, the public not gaining free access to stock information - leaves the Chinese stock market a bit of mystery.

According to a report by the China Securities Regulatory Commission, in the first half of this year, there have been 59 cases of insider trading and 14 cases of market manipulation, involving 16 companies and organizations.

This affects millions of individual investors. Some experts say insider trading has become a major tumor on Chinese stock markets.

Of course, more mature stock markets in the West also have similar problems, but with more com-prehensive supervision systems and relatively free access to such information, the stock market can get back on track despite a few hiccups. In many markets in the West a strict supervision system will force the stock market and the manipulator to pay for any misdeeds.

Among the checks and balances in the West, media scrutiny is among the most efficient means to help build a healthy stock market.

A healthy, open and credible stock market cannot exist without sufficient media scrutiny, public supervision and the harsh criticism that can come with it.

In an environment where media exposure is restrained, public supervision can be rejected and criticism can be dressed up as a violation of the law, and insider trading and manipulation can easily survive and thrive.

Although a public security bureau at a higher level quashed the wanted notice for Qiu Ziming Thursday, un-der great public pressure, the impression this incident left on people was destructive.

China needs to encourage more media scrutiny of the exchanges to ensure a clean market.