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China beefs up efforts to stabilize stock market


A screen showing stock market data in Shanghai, February 6, 2023. /CFP
A screen showing stock market data in Shanghai, February 6, 2023. /CFP

A screen showing stock market data in Shanghai, February 6, 2023. /CFP

China's A-share market climbed for two days straight on Wednesday, responding positively to the country's securities regulator's recent announcements of a series of policies to stabilize the stock market.

As of the market close on Wednesday, the Shanghai Composite Index rose 1.44 percent, the Shenzhen Component Index climbed 2.93 percent, and the ChiNext Index was up by 2.37 percent.

Institutional investors enter market

Central Huijin, a state-owned investment company, said in a statement on Tuesday it has increased its investment scope of exchange-traded funds, and it fully recognizes the current market allocation value of A shares.

The China Securities Regulatory Commission (CSRC) said it supported the move and will continue to coordinate and guide various institutional investors – such as public funds, private funds, securities companies, social security funds, insurance institutions and annuity funds – to enter the market more vigorously.

It will also encourage and support listed companies to increase the intensity of repurchases and holdings, introduce more incremental funds into the A-share market, and spare no effort to safeguard the stable operation of the market.

New securities lending suspended

CSRC has also suspended new securities lending and strengthened supervision of the business. Outstanding securities lending transactions will be settled gradually, the commission noted.

It also reminded securities firms of the importance of cracking down on illegal practices such as improper arbitrage that utilize securities lending.

Since the implementation of relevant supervision measures, the balance of securities lending transactions has fallen by 24 percent, the commission added.

Regulator announces M&A measures

Other measures announced by the CSRC include encouraging the merger, acquisition and restructuring among listed companies.

Specifically, the CSRC will enhance the inclusiveness in pricing restructuring and diversify the methods for overseeing performance commitments.

Industry leaders with high market values will enjoy a fast-tracked approval process, enabling them to acquire quality assets more efficiently.

CSRC: Improve investor returns

The CSRC called for listed companies to proactively improve investor returns and maintain market stability.

It urged efforts to establish a long-term mechanism for increasing investment value, as well as to better utilize their toolboxes such as share buybacks, regular dividends along with mergers and acquisitions.

Listed firms are required to actively strengthen communication with investors effectively in order to improve market expectations.

(With input from Xinhua)

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