The market value of China's stock markets will hit 13 trillion yuan ($1.57 trillion) and account for 50 percent of the nation's Gross Domestic Product (GDP) by 2010, according to a report released by a Beijing research institute.

A research team headed by Wu Xiaoqiu from the Financial and Securities Institute of the People's university of China revealed their predictions for China's capital market in the next 10 years at a forum on January 15 in Beijing.

The prediction was based on the assumption that China's GDP will maintain a nominal growth rate of 10 to 11 percent and an actual growth rate of seven to eight percent in the next decade.

The team also predicted that by 2010, all the stocks of publicly listed firms in China will be allowed to circulate; currently, non-circulating stocks held by the state often account for 60 to 70 percent of the total stocks of China's listed firms.

In 10 years, the number of listed firms in China will increase from the present 1,000-odd to 2,000, while the Composite Stock Index on the Shanghai Stock Exchange will rise from 1,400 points to 6,000 points, and the component on the Shenzhen Stock Exchange from 4,000 points to over 18,000 points.

The report predicts that waves of mergers and takeovers in the securities market will produce five or so international investment bankers in China, each with assets of 500 billion yuan in 10 years.

By then, individual investors with more than 10 billion yuan in securities assets will also emerge in China, the report said.

In 10 years, on-line stock trading will become a transaction vehicle, greatly changing current practices and leading to the decay of traditional sales models.

Securities investment funds will keep growing in China, and their market value may account for as high as 25 percent of the total market value of the stock market by 2010, the report said.

In the coming decade, stock index futures and foreign currency futures will be introduced into China, the researchers said.

They predicted that China's A-share and B-share markets will merge in 10 years, and that capital investment in most industries will be open to foreign investors by then.

In 10 years, the rules of the game for China's capital market will gradually be the same as those for the global market, the report said, adding that the transparency of the market will improve remarkably by then.

With competition intensifies, the report predicts, the current wall between securities, insurance, and banking and trusts, will collapse, both for market participants and for regulators. (Xinhua)