China’s chief capital market regulator has called on leading state-run investment institutions and private asset managers to step up their presence and help revive confidence among investors in the underperforming US$8.2 trillion stock market.
“I hope institutional investors will continue to maintain their confidence and composure,” Wu Qing, chairman of the China Securities Regulatory Commission (CSRC) said on Sunday in a statement on its website. “They should continuously strengthen the buying power, help investors obtain reasonable returns, enhance investors’ confidence and trust, and increasingly become a ‘stabiliser’ for market operation.”
These investors have become a “benchmark force” for rational, value-oriented, and long-term investment, Wu said, adding that they should continue to play a vital role in fostering the healthy and stable development of the capital market.
Wu Qing, chairman of the China Securities Regulatory Commission, speaks at a news conference in Beijing in March 2024. Photo: Bloomberg
The comments came after the CSRC met on Sunday with China’s top 10 institutional investors, including the US$402 billion National Social Security Fund, insurance asset managers, wealth managers at local banks and private equity funds. The meeting was to gather their feedback on the market, according to the statement.
China’s stock market is mired in a slump, with retail investors increasingly wary of getting burned. The CSI 300 Index, which tracks the nation’s 300 biggest companies listed in Shanghai and Shenzhen, has slipped about 10 per cent from this year’s high, while the combined turnover of the two exchanges has slumped to a four-year low.
Some investors have given up on Chinese stocks as their strategy failed to deliver. The MSCI China Index has risen 2.2 per cent this year, after three-year slump. In contrast, the Nikkei 225 has gained 11.5 per cent while the S&P 500 Index has advanced 18 per cent.
“It is not unusual for securities regulators to call for institutional investors to buy shares when the overall market sentiment is weak,” said Ding Haifeng, a consultant at Integrity, a Shanghai-based financial advisory firm. “Wu is sending a message to them that now is time to buy low as they chase long-term gains.”
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Why investors can expect more market volatility after recent global stock sell-off
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This is not the first time Wu is nudging fund managers to inject life into the market. Since taking office in February, the regulator – who has the sobriquet as China’s “broker butcher” because of his track record of shutting errant brokers – has unveiled drastic measures, including imposing stricter rules for new stock offerings, cracking down on fraudulent deals, and tightening oversight of high-frequency trading.
Participating institutions suggested several measures to deepen market reforms, according to the CSRC statement. They included enhancing incentives and taxation policies, as well as refining the IPO registration system to attract more tech and innovation-driven companies.
The CSRC is also promoting wider market reforms, Wu said. It will continue to improve the nine measures related to company listings and stock trading, and remove underperforming companies from stock exchanges. The CSRC is keen to attract more stable, long-term capital to the market, he added.
