The Study On Stock-holding Preference Of Institutional Investors Of China Securities

In November 1997,state council promulgates《Provisional management act for the securities investment funds》. So the stock market of China is cultivated and institutional investors are developed. In March 1998, closed-end investment trusts are set up and worked. Three types of enterprises (State-owned enterprises, state-owned assets of holding companies and listed companies) funds and insurance funds begin to Enter the stock market in 1999.and then mutual funds establish in September 2001.In November 8, 2002, the people's Bank of China and the SFC jointly distribute《Provisional management act for Qualified Foreign Institutional Investors (QFII) investing in domestic securities》.And in the same year on December 1 the act is implemented. Although since 1997, the government administration section begins to develop institutional investors vigorously. And in 2001 the government advances "super-conventional" developing. However, before 2005 the securities market sustains to slump and has the unique "Non-tradable-share" phenomenon. The influence bringing in institutional investor is limited to the stock market in 1/3 circulation stock. Its status and function are not true shown. But institutional investors have welcomed the unprecedented development opportunity because the non-tradable-share reform is implemented in the second half of 2005 and the Chinese Stock market enters "the bull market" in the second half of the yea 2006,Regardless of be looked from the Stock market system's supplies or the demand. one the one hand, the development of each type of institutional investors needs to be crutched by personal investor and the companies having the high quality properties. On the other hand, some former non-circulating stocks begin to circulate in the securities market. And so it needs that institutional investors digest and absorb these stocks. And so it can be avoided that the stock price falls suddenly and the market develops stably.Institutional investor has the following features such as low information cost, reasonable disperse of risks, high scale benefit, and powerful supervision and so on. Their investment strategies and investment behaviors have a gradual increasing influence to the stock market. They have not only the immediate influence through voting by foot but also the important influence to company's management and outstanding achievement through voting by hand voting. So, under the condition of entire-circulation, The Study on Stock-holding Preference of Institutional Investors of China Securities have very important significance and the practical significance.At present, Institution investors include fund companies, three types of enterprises (State-owned enterprises, state-owned assets of holding companies and listed companies), insurance companies, stock companies, QFII, enterprise annuities and retire pensions in China. And the main is fund companies. So, this paper studies the stock-holding characteristics by fund in our country, using the statistical method of multi-linear regression with the stock-holding proportion as the dependent variable and the systematic risk of the individual stock, earning per share, book value per share, market-to-book value, age, stock market value and turnover, and so on, as independent variables. The sample period is from the beginning of 2004 to the beginning of 2007, with total 13 quarters.The earnings per share and book value per share is significant, and the coefficient is positive, which implies that as the rational investors, Institutional investor should prefer high earning per share, because it reflects the fundamental value of the company worthy of investing. It conforms to the traditional recognition. The systematic risk is insignificant. In our country, the institutional investors prefer low systematic risk stock. It means that fund as an institutional investor is greatly influenced by the prudent principle. The total market value of the stock is significant, and coefficient is positive. The age is significant and coefficient is negative, which shows that funds tend to hold short age stock in the public market that contrast to the traditional analysis. It may be attributed to the information disclosure system in our market.Finally, on the basis of above-mentioned research, there is simple conclusion about how to select the stock and policy advice for how to develop institutional investors of our country.