Buybacks, speedy regulatory approvals 'can shore up' A-shares: analysts
More efforts planned to facilitate entry of overseas funds
Published: Aug 23, 2023 09:21 PM
A-share Photo:VCG

A-share Photo:VCG

A number of A-share listed companies have in recent days announced buyback plans, a move that Chinese analysts said could help stabilize the domestic stock market, which is at its lowest point since January.

At the same time, the China Securities Regulatory Commission (CSRC) said it would accelerate approvals for funds that aim to channel more money into the market.

Analysts said these moves are expected to help stabilize the A-share market.

From August 17 to Tuesday, at least 63 listed companies have announced plans for share buybacks, with several companies each planning to buy back 100 million yuan ($13.71 million) worth of shares or more, according to industry portal China Fund.

The number of companies that will complete share buybacks this year is expected to exceed the total for 2022. As of Sunday, 857 companies had completed such moves, closing in on the 2022 total of 1,098, according to China Fund.

More than a dozen leading Chinese public fund, securities and asset management firms on Monday announced that they would increase holdings of their own financial products, expressing confidence in the long-term prospects of China's capital market.

In less than two weeks, the CSRC approved four exchange-traded funds that track the STAR 100 Index. The managers of these funds, which focus on high-tech sectors such as robotics and integrated circuits, only submitted their registration requests on August 10, according to the Securities Times.

Yang Delong, chief economist at Shenzhen-based First Seafront Fund Management Co, told the Global Times on Wednesday that the moves by listed companies and the CSRC can bring more funds into the market, which is suffering from a poor performance and weak confidence recently. 

"I expect that recently rolled out moves could help stabilize the market and bolster investor confidence," Yang said. 

Pan Helin, a joint director of the Research Center for Digital Economics and Financial Innovation affiliated with Zhejiang University's International Business School, told the Global Times on Wednesday that faster approvals by the CSRC can expand financing channels for funds to invest in the capital market while share buybacks could boost falling share prices.

"Such policies are positive signals, underscoring the regulator's intention to channel more funds into the market," noted Pan.

Following a key Party meeting on July 24, China has rolled out targeted and substantive measures to revitalize the capital market and boost investor confidence.

For example, the CSRC on Friday announced a raft of support policies, including cutting transaction fees, developing equity funds and considering the creation of a "green channel" for technology companies that aim for breakthroughs in core technologies.

The CSRC will further improve the Stock Connect programs, help introduce block trading mechanisms and products such as real estate investment trusts into the target market, and facilitate the entry of overseas medium- and long-term funds into the market, said CSRC Vice Chairman Li Chao on Tuesday during a celebration to mark the 30th anniversary of the first H-share listing on the Hong Kong bourse.

Chinese stocks fell on Wednesday with the Shanghai Composite Index down 1.34 percent to 3,078.4 points, the lowest since January.