Empowering investors: investor education practices at Shenzhen Stock Exchange
The marketplace operated by Shenzhen Stock Exchange (SZSE) features “small- and medium-sized” companies in two aspects. Firstly, it is a cluster of high-tech innovative SMEs, which often witness disruptive growth, but are susceptible to instability in financial performance and stock prices. Secondly, the market is dominated by “small and medium-sized” investors, driven by a herd mentality and prone to frequent trading. After years of effort in investor education, positive changes have taken place. According to SZSE’s survey, retail investors are becoming increasingly rational (the percentage of value investors increased from 20.4% in 2015 to 28.6% in 2018), and more informed about investment (57.6 points in 2014 to 71.1 points in 2018).
Guided by surveys and research, SZSE continues to innovate its methods of investor education, and enhance efficiency in investor education in the following four key aspects.
Firstly, based on the diverse needs of investors, SZSE has implemented various investor education services. In addition to the existing activities such as “Meet Your Listed Companies”, “Securities Companies’ Open House Program” and “Visit the Stock Exchange Program”, customised activities are organised to serve different groups of investors. For new investors, special events are held to help them understand the risks in investment; for elderly investors, educational activities are held in residential communities to promote risk awareness and rational investing. In response to investors’ increasing demands for mutual funds, SZSE has organised events to promote long-term value investment. In Central and Western China, where the capital market is less developed, SZSE has launched the “Investor Services in Western Regions” campaign to give local investors access to high quality investor education services.
Secondly, SZSE promotes interactive investor education based on investors’ experience and feedback. Since the traditional lecture-style investor education initiative has its limitations, SZSE explores various interactive ways to enhance efficiency in investor education. SZSE has established an interactive and experiential investor education centre using latest visual technologies, which turns securities knowledge into scenario-based interactive educational modules, offering investors a one-stop platform to learn basic securities knowledge, increase risk awareness and improve analytical skills. In addition, SZSE has held debates and invited representatives from both market institutions and retail investors to debate with each other on issues relating to the stock market.
Thirdly, SZSE has adopted social media to maximise the effect of investor education. The internet has changed the landscape of information delivery, so the SZSE has taken advantage of new media and technology to expand the breadth and depth of investor education. For example, informative brochures, comics, videos, public service advertisements (PSAs) and other new media approaches give investors a better reading experience. We now provide access to various education and information channels in investors’ daily lives: an investor education live-streaming system, investor education official web accounts, and columns on Snowball Finance (Xueqiu), Toutiao, East Money and other new, influential media platforms focusing on financial news, as well as PSAs in Shenzhen’s mass transport systems, hospitals and office buildings.
Finally, SZSE has built a one-stop service platform to enable investors' participation in corporate governance and in the exercise of rights and interests. In 2004, the SZSE initiated "Easy Voting”, an online voting service for shareholder meetings. By using "Easy Voting", investors can exercise voting rights online. In 2011, SZSE’s “Easy IR” was launched and has been acting as a bridge of communication between investors and listed companies. Thanks to the Q&A function on Easy IR, investors are gradually understanding their rights as shareholders, kick-starting a positive feedback loop. Later on, the SZSE continued to build the “one-stop” investor service platform with Easy IR, Easy Voting and Easy Call as main features, providing investors with a toolkit of consultation, questioning, voting, investment analysis and feedback. These tools are helping safeguard an investor’s legitimate rights. Currently, SZSE’s investor service platform receives over 1.2 billion visits each year. IOSCO has also published an article on SZSE’s practices on its official website as a good example for emerging capital markets.
In the future, we should further enhance the efficiency and effectiveness of investor education. Helping investors enhance investment knowledge, establish rational investment philosophy, and reduce irrational behaviours are key points and challenges of investor education. It is important to carry out in-depth research on investor behaviour and psychology, explore the application of behavioural finance theories in investor education, and help investors transition from changing ideas to changing behaviors. In addition, big data, artificial intelligence and other fin-tech solutions should be developed to further analyse the characteristics of investor behaviours. Last but not least, a systematic and regular investor information analysis platform, which profiles investors in both objective and subjective dimensions is necessary and will contribute to a more tailor-made investor education programme.
SZSE participated in 'Ring the Bell for Financial Literacy' as part of World Investor Week 2019 on 23 September 2019.