Pengpai News reporter Ge Jia [Editor's Note] Starting from the establishment of the Shanghai Stock Exchange, on December 19, 2020, China's capital market has been officially established for 30 years. Over the past 30 years, China's capital market has been continuously reforming,

Pengpai News reporter Ge Jia

[Editor's Note]

Starting from the establishment of the Shanghai Stock Exchange, on December 19, 2020, China's capital market has been officially established for 30 years. Over the past 30 years, China's capital market has been continuously reforming, innovating, developing and growing, and today it has become one of the most important financial markets in the world.

At this special historical node, The Paper launched a special topic "The Power of the Market", interviewing 30 iconic figures in the Chinese capital market, looking back at the major historical moments in the history of China's capital market development in the 30 years, and looking forward to the development prospects and directions for the next 30 years.

"At the beginning, there was a saying called fire prevention and theft prevention fund... All listed companies don't like you (funds) because they feel they will be bound by you!" On December 8, 2020, Xiao Feng, chairman of Zhejiang Merchants Fund, accepted an interview with The Paper in the conference room on the 21st floor of Wanxiang Building, Lujiazui, Shanghai. He was quite moved by the situation of public funds when they first entered the Chinese capital market.

As one of the few entrepreneurial veterans in the fund industry who are still active in the front line of management, Xiao Feng has created and managed the "five old companies" Boshi Fund for 13 years. The scale of the company's managed funds has grown from 2 billion yuan to more than 200 billion yuan, becoming one of the largest fund companies in China's asset management scale.

Xiao Feng, 59 years old, has more than 25 years of securities experience and asset management experience. He has served as secretary of the board of directors and director of the Securities Committee of Shenzhen Konka Electronics Group Co., Ltd., deputy director of the Securities Management Office of Shenzhen Special Economic Zone Branch of the People's Bank of China, director of the Shenzhen Securities Management Office, deputy director of the Securities Management Office, and deputy director of the Securities Management Office.

Xiao Feng said that before 1998, there were not many institutional investors in the Chinese capital market that could participate, and the emergence of public funds made the Chinese stock market realize the existence of institutional investors for the first time. This new type of investor has changed greatly to the entire market.

But listed companies were not particularly welcome to public funds investing in their own stocks at that time. The reason is that Xiao Feng believes that "the fund (because its high professionalism) is difficult to speak and has requirements."

"At that time, listed companies didn't like you (funds) because they felt they would be bound by you. As long as you are in it and you are an institution, your influence would be different, and they should take it more seriously. The influence of individual investors is often relatively weak." Xiao Feng admitted that not only listed companies, but individual investors at that time did not like to buy stocks bought by institutions.

"At that time, institutions did not have time to prove that their stock selection ability was much higher than retail investors, so retail investors did not follow you. Listed companies were anxious. If you bought so many (shares), the retail investors followed the weakening of the trend. My stock price would not rise. You still have such high requirements for me, so there was a joke about 'fire, theft and anti-fund'. "

What is gratifying is that after more than 20 years of change, institutional funds have gradually increased their voice in the capital market. Xiao Feng believes that this is a huge change in the entire ecology of China's capital market, and the market structure is moving closer to a mature market.

Xiao Feng’s so-called market structure change is that the market already has a mechanism to select good assets and enters the positive cycle mode of good coins driving out bad coins .

"For example, the increase in some small and medium-sized stocks this year is actually not obvious. No one pays attention to you, no one studies you, no one invests in you." Xiao Feng said that this has shown that market participants have the ability to choose. The reform of the registration system of Science and Technology Innovation Board is timely in the background. "The risk market should be allowed to undertake the task of cultivating great companies."

Xiao Feng believes that piloting the registration system on the Science and Technology Innovation Board is a matter of great historical significance in the 30 years of development of China's capital market.

In addition, the reform of equity split and the growth and maturity of the public fund investment team are also regarded by Xiao Feng as a great achievement in the development of the capital market in the past 30 years.

"We are still short of long-term funds." When asked about any regrets in the development of the capital market for 30 years, Xiao Feng said that companies want to raise funds directly in the capital market, but there is no funds in the market that can match the capital market's maturity, which is a question that needs to be improved so far.

In addition to serving as the chairman of Zhejiang Merchants Fund, Xiao Feng currently holds several positions. He is the vice chairman and executive director of China Wanxiang Holdings Co., Ltd., the vice chairman of Minsheng Life Insurance Co., Ltd., the chairman of , the chairman of Wanxiang Trust Co., Ltd., the chairman of , Minsheng Tonghui Asset Management Co., Ltd., the chairman of Tonglian Data Co., Ltd. (referred to as "Tonglian Data") and the chairman of Wanxiang Blockchain Co., Ltd. (referred to as "Wanxiang Blockchain").

When leaving Boshi Fund in 2011, Xiao Feng expressed his life plan to strive for another ten years before retiring at the age of 60. This time, when he was asked again whether he would officially retire when he was 60 in 2021, Xiao Feng's answer was no.

"It's like going through the procedures to get the retirement salary at the Social Security Bureau. I guess it's unlikely that it's not done completely now, but it's definitely a step-by-step subtraction," said Xiao Feng. For example, since Tonglian Data, founded, has been productized in 2018, its revenue has increased significantly every year in the past two years. What I am thinking about is how to mature the business model of Tonglian Data and then go public.

is the transcript of the exclusive interview with Xiao Feng by The Paper reporter (slightly edited) :

Pengpai News: China's capital market has been established for 30 years. How did you first become a connection with the capital market?

Xiao Feng: By chance, I went to Shenzhen in 1989 and joined the current listed company Shenzhen Konka (000016). Since I was born in the liberal arts, after I went to Shenzhen Konka, I did writing writing work in the general manager's office, including writing meeting minutes of the general manager's office and board of directors.

Coincidentally, at that time, Shenzhen Konka was a joint venture, and its foreign shareholder was a Hong Kong company called Hong Kong Hua Electronics, which was listed in 1990. So once when the board meeting was held, there were already 5 stocks in Shenzhen at that time. Hong Kong shareholders said that they had been listed in Hong Kong and hoped that Konka would also be listed. But it was a TV factory, so there were no students in economics and finance. So who would prepare for this? Everyone saw it and said, "Or Xiao Feng, you should prepare, because except for the board members, I sat there alone to do the meeting minutes. In this way, I went to the preparation team to specifically promote the company's listing. I didn't understand at that time, so I started to buy books in the bookstore.

To be honest at that time, there were actually very few books on the securities market. There was a book written by Yu Guogang from the Shenzhen Stock Exchange. He was once sent to Japan to study the securities market. After he came back, he compiled a book about what he learned in Japan. This was the first book I read about the securities market. Shenzhen also has another convenience. We entrust other friends to go to Hong Kong to find books. The first thing we found was the thick listing rules of , of the Hong Kong Stock Exchange. So we started to learn these things and started to prepare a listed company.

The Paper: Is the preparations for the listing of Shenzhen Konka going smoothly?

Xiao Feng: is very smooth.

In 1991, we began to issue B shares first. President Li Guixian from the head office of the People's Bank of China also went to Shenzhen to attend the signing ceremony of the B-share underwriting agreement. The Shenzhen Branch of the People's Bank of China organized several companies to sign such an agreement with Hong Kong underwriters together. At that time, it was obvious that he attached great importance to it.

Because this is the first time a company registered in China has issued stocks targeting foreign investors on domestic exchanges. At that time, the introduction of foreign investment was still a very important topic, so the president of the head office also came to Shenzhen to attend. This is an innovation in an important new way for our country to attract foreign investment.

After issuing B shares, Shenzhen Konka issued A shares again in early 1992. After completing these two, it was another coincidence that I joined the People's Bank of China.

The Paper: Why did change jobs from listed companies to work in the regulatory department?

Xiao Feng: At that time, there were already more than a dozen listed companies, so there was a new topic in front of the People's Bank of China, which was how to supervise listed companies. At that time, there was no China Securities Regulatory Commission. The supervision of the securities market was authorized by the People's Bank of China Head Office and implemented in detail in the two branches in Shenzhen and Shanghai.

The People's Bank of China has supervised banks, but has not supervised ordinary industrial and commercial enterprises, so it is also a new topic for the People's Bank of China. Because I have been going on the listing, after I issued a stock, there were many announcements, and a series of things needed to be reviewed before we could publish them to the public. One day I finished the work. Zhang Guoqing, director of the Securities Management Office of the People's Bank of Shenzhen and later founder of Junan Securities, was in the corridor. He said, Xiao Feng, would you like to work in our People's Bank of China? I said, why am I here? He said that we are now looking for someone responsible for the supervision of listed companies. You have made a company listed from beginning to end, and it is very appropriate for you to do it. Among the current people in the People's Bank of China, none of us have done these things in the company, especially for a general industrial and commercial enterprise. You have experience, would you like to come?

In the process of preparing for Konka's joint-stock transformation and listing, I went from not understanding the securities market and capital market at all to understanding a little. I myself think this is an opportunity brought to you by a very big era. So I said I would.

I remember Zhang Guoqing told me at that time, but there is one thing: we only have a salary of 800 yuan a month, and I said I would be willing to pay 800 yuan. At that time, my income was more than 3,000 yuan a month, and after that, my income decreased by 70%. But I think this is something new for China's entire market economy and we need to participate. This matter is very meaningful.

The Paper: After joined the People's Bank of China, is there anything unforgettable in the supervision of listed companies?

Xiao Feng: There is a textile printing and dyeing company. After the lottery was announced for the lottery, it was reported that the capital formation of the company was false. This topic is in front of our Securities Management Office.

After receiving the report, we went to see his materials and found that there was indeed a problem in the middle. What is its main problem? He used the dollar twice and used it to transfer it to the company with funds, but in fact it was a trade payment, but the trade payment was regarded as an investment, but he took the goods away again. By doing several trades in this way, it is equivalent to the fact that its capital is empty. But we are facing a question: whether we have the right to determine the process of capital formation is not a matter within the scope of the People's Bank of China's legal rights.

So we began to ask accounting firm to serve as a third-party financial witness to conduct a special audit of the company's capital formation process.

At that time, listed companies already had prospectuses. Although they are not as complicated as they are now, they already have prospectuses. However, the accounting firm does not express its opinions separately, but will only audit the company's financial status.

After the new stock draws, the company will start publishing the prospectus. After publishing, it will start paying the money, and after paying the money, the stock will be listed.

Just before the lottery was completed and the payment was paid, we asked the accounting firm to conduct a special audit of the company's capital formation process and issue an assertion opinion on it.

Later, we asked lawyers to issue a legal opinion on this. This is the first time that lawyers in the Chinese securities market have issued legal opinions on the IPO of listed companies.

So it is also from this company that all the company's prospectuses have a separate chapter on the capital formation process introduction. Later, instead of letting the company go to the prospectus, we found a candidate company to replace him, and then issued the winning number by the candidate company.

The Paper: When you dropped your income by 70% and went to the People's Bank of China to supervise listed companies, how could you change the track and prepare for Qiboshi Fund?

Xiao Feng: In 1993, the China Securities Regulatory Commission was officially established. The Shenzhen Securities Administration Office where I was at that time had to change its brand that year and became the Shenzhen Securities Regulatory Bureau of the China Securities Regulatory Commission. During the flip process, our personnel and organizational relationships have to be transferred from local governments to the China Securities Regulatory Commission. At this time, standardized securities investment funds began to appear in China. This is another chance.

In the process of preparing for the listing of Shenzhen Konka, I learned for the first time that there is a kind of profession in this world called fund manager. Because at that time we issued B shares to overseas institutional investors, it was such a convenience in Shenzhen that overseas underwriters organized fund managers in Hong Kong to visit the site, from two buses from Hong Kong, seventy or eighty fund managers. At that time, there were no fund managers in China.

I must be responsible for receiving it in the company. It was the first time I learned that there was such a profession, which had managed so much money and then invested in stocks of listed companies. I think this profession is a very good profession.

In March 1998, the first batch of public funds - Southern, Huaxia and Cathay Pacific, began issuing funds. I was also the deputy director of the Certificate Administration Office. I think this is another very good opportunity. I mentioned that I wanted to participate in this matter, so I left in 1998. When I left, I was still the Shenzhen Securities Management Office. In a few months, I flipped the "Shenzhen Securities Regulatory Bureau of the China Securities Regulatory Commission".

So I started preparing for the Boshi Fund on April 1, 1998, because I think this is definitely a new thing with huge development prospects in China.

Since we started to come into contact with such a profession in 1991, we have dealt a lot every year, because whether it is in a listed company or a regulatory department, the construction of the B-share market is also one of the work tasks of the regulatory department, so we have to deal with them constantly. First, listen to the opinions of overseas investors and build the B-share market well. They will also visit because they want to buy B-shares, especially from London and New York. They also know that in addition to the listed companies that need to ask clearly, China's regulatory policies are also one of the important reference factors for him to decide on investment, so they will visit the regulatory authorities.

There are overseas fund managers who are coming to visit, and overseas securities research departments are coming to visit. Of course, we will welcome them warmly because we also hope to promote the B-share market and introduce them to our B-share market policies and what improvement measures we have. Sometimes B-share trading is not so active, and they will also make a lot of suggestions that should be like this and that, and we are happy to listen to it, so we have been dealing with fund managers for so long. So back to the 1998 mentioned earlier, I think this is a good opportunity. So I made this choice.

The Paper: Boshi Fund was established on July 13, 1998, becoming one of the first five fund management companies established in mainland China. In that market where individual investors dominate, what changes have taken place in the market voice of public funds?

Xiao Feng: Public funds play a very important role in the construction of the entire capital market, especially in investment culture, investment philosophy, and investment methods. This is one aspect.

On the other hand, it has changed the structure of investors in China's capital market, and institutional investors have begun to appear in the capital market. Before 1998, China had almost no institutional investors in a substantial sense because insurance companies were not allowed to invest in stocks. At that time, some of the self-operated behaviors of securities companies were relatively short-term. Because there was no need for professional investors, the research power of securities companies was very small. Therefore, the emergence of public funds has made the concept of institutional investors in the Chinese stock market for the first time. Although there were very few in 1998 and only five companies actually operated, it changed the entire market very much.

The Paper: What are the specific changes in ?

Xiao Feng: First, there is a new type of investor, which was not before. The type of investor here is subject to many constraints. First of all, it only has one account. It is not like other companies that have stock trading. If you get 100 personal ID cards, you only have one account, and your trading behavior will change greatly. So this is a huge change.

Maybe everyone couldn't see it in 1998, but it had a huge change to the entire stock market. These institutional investors are more particular in methodology and trading behaviors, and each company must begin to explore its own unique skills.

Then the fund concentrated so much money, and the voice between it and listed companies was not something that individual investors could have. This was a catfish effect. Although it was too small at that time, the listed company had to consider it if it met a fund and two individual shareholders.

So, at the beginning, there was a saying called fire prevention and theft prevention fund, why should we prevent funds? Because the fund is highly professional and difficult to speak, there are requirements. When the shareholders' meeting is held, if the fund speaks, it will affect a large number of people below. You are a professional opinion leader, so it's so troublesome. You'd better not invest in my stocks.

was very different from now on. Nowadays, listed companies may hope that fund managers will come to investigate every day. That was not the case at that time. At that time, you'd better not touch me. It would be difficult to deal with it once you touch me. It's called fire prevention and theft prevention fund. Most listed companies don't like you because they think they will be bound by you. As long as you are in it, you are an institution, your influence will be different. If you are an institution, you have to take it seriously.

And the entire investment culture was different at that time, and the hype was too popular. These retail investors do not like to buy stocks bought by institutions. At that time, there was a saying in personal investment. You see, there is a "large shareholding investor" here. Your institution may have bought 5 million shares. Think that if he buys it again, he will help you carry the sedan chair? He would think so. He did not recognize you as an institution at the beginning, and your professional ability is stronger than me. Since you bought 5 million shares, I should follow you. I trust you because the institution did not have time to prove that its stock selection ability was much higher than that of him, so he would not follow you. If retail investors don’t follow you, the listed companies will be anxious. If you buy so much, those retail investors won’t buy it, and my stock price will not rise, so there is a joke called fire, anti-theft and anti-funding funds.

The Paper: More than 20 years have passed, and the situation of this fire, theft and anti-theft and anti-fund fund seems to no longer exist, right?

Xiao Feng: The entire market is different now, you will see this change. If it is a stock that an institution highly recognizes, many individual investors will also recognize it. In addition to this, other market participants will definitely give you more attention.

For example, a securities company must do more research on you, because the research department of a securities company wants to find institutions to get commissions. Institutions like this company and pay attention to this company. If you don’t do research, what roadshow do you come to my fund company to do? Why should I hand over my commission to you? So this is not just about institutional investors putting their money in this listed company, it will drive the resources of the entire market to pay attention to you.

So now I have become a listed company and I am afraid that there will be no fund managers.

has changed the entire market. This change is because of institutional investors joining it, which has brought about great changes in the entire ecosystem. So to this day, although mutual funds have spent more than 20 years, you find that the structure of the entire market has changed the same as that of a mature market.

This year, many small and medium-sized stocks have stopped rising. No one pays attention to you, no one studies you, no one invests in you. The entire stock market has entered a positive cycle from the so-called fire, anti-theft and anti-funding stage in 1998 and 1999, when it was the stage of bad money driving out good money. If you don’t do well enough, the market will not pay attention to you. There is a mechanism to select good things, there is a mechanism to focus on good things, and there are many resources piled up on good things, so the positive market incentive mechanism comes out. You must do it well. If you don’t do it well, it is a very painful thing for you to go public. If you do it well and your stock listing is a very happy thing. This is the market mechanism comes out.

The Paper: In the context of changes in the capital market ecology, it seems that it is timely to launch the Science and Technology Innovation Board and pilot the registration system?

Xiao Feng: It really took us a long time to reach this level. If we reach this level, the registration system reform will be easier.Because the market has such a positive incentive, from the supply perspective, we can relax a little, lower the threshold, and let more companies come, because the market will choose it after the arrival.

supervision is definitely needed, and punishment for some bad people afterwards is definitely needed. When the market has formed positive incentives, the threshold for stock supply will be lowered, so that the market can choose, and buyers will be responsible for it.

The Paper: China's capital market has experienced thirty years of development, what are the ones that are worthy of pride?

Xiao Feng: I think there are several things, the first thing that is done is very good, and I think it is also very difficult, but it is also very good to do it is the reform of equity splitting, which solves the biggest problem that hinders the development of China's capital market.

Second, the registration system Science and Technology Innovation Board launched in the past two years is also a huge impact on the overall Chinese economy, China's scientific and technological innovation, and even the competition between China and the United States. It can even be said that it will have a huge impact on China's national destiny.

Innovation and entrepreneurship are extremely likely to fail. If the country encourages scientific and technological innovation, the risk market should be allowed to undertake the task of cultivating great companies, rather than letting the government and state-owned funds bear this. The Science and Technology Innovation Board will lead the entire society to invest money, whether it is biotechnology without operating income or other high-technology without profitability. What a great thing.

Third, the public fund business has fully proved its vitality in China for more than 20 years, and it also fully proved that public fund, a system introduced from overseas, has bloomed new flowers in China based on China's national conditions. Only with such a strong team of Chinese public funds can our capital market be opened to the public.

If there is no such a strong financial institution as China that has proved its ability to make money, profitability and management capabilities for more than 20 years, and the Chinese capital market is directly opened to foreign financial institutions, it will become a direct game between overseas institutions and Chinese retail investors. That won’t work, it involves financial security. So I think one of the great achievements in capital market construction in the past is that it has nurtured a team of local institutional investors with strong capabilities.

I think it can compete with world-class institutional investors, and there is no problem.

The Paper: So what are the regrets in the development process?

Xiao Feng: I think the biggest regret of our entire capital market is that it matches the term of the funds related to direct financing. We still lack long-term funds, so you need to do direct financing in the capital market. You lack long-term funds and there is no funds that can match the term of the capital market. This is a problem that needs to be solved so far. Now in the venture capital stage, the government plays the role of a long-term fund provider, but in the stock investment stage, because our pension accounts are not accumulated, the supply of long-term funds is still missing.

The Paper: Can look forward to the development direction of China's capital market in the next ten years?

Xiao Feng: We have come to this day and the securities market has established a mechanism for positive incentives, positive circulation, and good money to drive out bad money.

Under such a mechanism, as China's economy becomes more and more important in the world in the next 10 years, China's capital market will definitely be a global market in the future. It will truly attract global funds. In the future, investors in China will become more and more diversified, and global funds will compete for their own returns. Only by doing this can we say that Shanghai is an international financial center.

I expect China's capital market to be fully open in the next 10 years and to fully open the door to overseas investors. At that time, Chinese companies' dependence on the US capital market will drop significantly because their money can come, so there is no need for us to send the company there again.

In the past, it was because of the differences in the basic securities legislation between the two countries. It was fully disclosed and listed, so companies that are not profitable can only go to it, and companies with a double-layer equity structure can only go to it.Gradually, under the registration system of the Science and Technology Innovation Board, there are more listed companies without profits, and the system gap is gone. These companies do not need to go far, and listing on the Science and Technology Innovation Board is also OK.

Therefore, the degree of dependence on the US capital market in China will definitely decline in the next 10 years, and the local market is completely sufficient to accommodate them. All their structures, all business ideas, all equity ideas, and all innovative ideas can be accommodated by China's capital market, all can meet and support them. China's capital market will definitely become a very international market.

The Paper: You left Bose Fund in 2011. In an interview with the media, you said that you once expressed your life plan to strive for another ten years before retiring at the age of 60. Next year, you will be 60 years old. Will you choose to officially retire?

Xiao Feng: is like going to the Social Security Bureau to get the retirement salary after completing the procedures. I guess it is unlikely that now. Things have not been completely done, but it is definitely a step-by-step subtraction. I want to completely complete the few things I am doing and shape them. Whether it is Tonglian Data, blockchain, Zhejiang Merchants Fund, these companies that are related to technology finance will completely polish their models into them, and then they can enter the self-circulation. Just like when I left Boshi Fund, it is an enterprise that can operate and cycle itself. It always needs to move forward, always need innovation, and always need optimization, but it basically has a mechanism that can operate itself.

Editor in charge: Shi Dongdong

Proofreading: Zhang Yan