China’s securities regulator on Monday night unveiled a multiple-point proposition aimed at stabilizing the capital market and revitalizing investors’ confidence, with calls for stock repurchases and proactive responses to market concerns by listing firms, in a much-needed injection of optimism for A shares.
In a late-night statement, the China Securities Regulatory Commission (CSRC), along with the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) and the All-China Federation of Industry and Commerce (ACFIC), issued the 12-point proposal that is intended to prop up the healthy development of listed firms whose operations face new challenges in front of current complexities.
As part of the measures advocated to steady businesses’ expectations, the three departments pledged to support financing of privately run firms through listings, mergers and acquisitions, and improve the supportive mechanism for private firms to issue bonds.
Policy arrangements for firms in regions hit hard by COVID-19 and those engaging in businesses related to virus containment were also mentioned in the Monday statement, with measures including waiving initial and annual listing fees and online voting service fees for 2022.
The proposition also has plans to encourage social security funds, pension funds, trusts, insurance and wealth management institutions to allocate more funds into equity assets and invest more in the capital market, notably in shares of premium listed firms.
The late-night bulletin was seen as a restoration of investor confidence amid woes that the Chinese mainland stock market might be losing steam.
The benchmark Shanghai Composite Index lost 2.61 percent closing below 3,200 points on Monday, while the tech-heavy ChiNext index plunged 4.2 percent.
The largest Chinese electric vehicle battery maker, Contemporary Amperex Technology Co (CATL), saw its shares dive 7.27 percent on Monday, leading the hefty losses across the market.
Ningde in East China’s Fujian Province, location of CATL’s base, reported a few infections fueling fears of disruption to EV supply chains even though the battery giant reportedly said that it has not halted production.
The flagship Shanghai index shed 12.99 percent year-to-date as of Monday’s close while the ChiNext index fell 25.9 percent.
In an effort to stabilize investors, listed firms will be guided to have their voices heard in a proactive manner through media interviews, press releases on their websites and official public accounts, as Monday’s proposition expects them to respond to market concerns and restore investor confidence.
Among the soothing measures there are also calls for listed firms to buyback stocks and for major shareholders and board directors, supervisors and senior executives to take a long bet on their stock holdings and increase them in case of hefty stock drops.
It is worth noting that major shareholders are warned against an increase in stock-pledged loans. In case of using shares as collateral for loans that trigger forced liquidation or default amid heavy stock losses, financial institutions will be urged to actively negotiate with shareholders and deal with share liquidation risks in a prudent manner by replenishing collaterals among other ways of loan rollovers.
Clear tasks have been assigned for all the three major departments, according to the notice.
The CSRC and its affiliates are asked to closely track the situation of listed companies and the impact of coronavirus while conducting its function responsibly and improving the quality of service.
The SASAC will provide active guidance and support for the share repurchase and cash dividends of state-controlled listed companies and will guide state-controlled listed companies to become a model for promoting the stable development of the capital market.
As for the ACFIC, all levels of the organization will give full play to the role of guiding and serving private listed companies, strengthen research and training on private listed companies, guide private listed companies to adhere to laws and regulations, listen to their opinions and suggestions extensively and reflect corporate demands in a timely manner.
A-share Photo: VCG
