Chinese vice premier calls for more support for high-quality development of listed firms to help stabilize capital market
Move to help boost confidence, stabilize capital market: analysts
Published: Jan 29, 2024 11:32 PM
Stock market Illustration: VCG

Stock market Illustration: VCG

Chinese Vice Premier He Lifeng on Monday called for efforts to address difficulties faced by listed companies and increase support for high-quality development, so as to help boost confidence and stabilize the capital market.

The remarks added to the growing focus of Chinese policymakers on stabilizing the capital market. Also on Monday, the State-owned Assets Supervision and Administration Commission (SASAC) vowed to fully carry out a new appraisal system for the listed units of state-owned enterprises (SOEs) to better reward investors and boost their confidence.

Market analysts said that recent remarks and efforts from senior officials and regulators underscored the country's resolve to stabilize the capital market and offer institutional support for investors, which has already helped stabilize market confidence.

He Lifeng attended a national meeting in Beijing on planning official visits to listed companies and promoting the high-quality development of listed firms, according to the Xinhua News Agency. He urged relevant localities and departments to earnestly solve specific difficulties and problems faced by listed firms through inspection and research and increase support for high-quality listed firms, so as to help boost confidence, stabilize the capital market and promote high-quality economic development. 

He said that improving the performance of listed firms and restoring their investment confidence are important measures to seek economic progress while maintaining stability.

Also significantly, the SASAC vowed to fully implement an appraisal system based on the market capitalization of listed arms of SOEs in an effort to build an investor-centric environment. The move is aimed at guiding enterprises to pay more attention to the intrinsic value and market performance of listed companies, convey confidence, stabilize expectations and better reward investors, according to the SASAC.

The measures will assess the performance of the listed firms controlled by central SOEs in a quantitative way and objectively appraise each company's market capitalization management, and intensify penalties for violations that step on the red line or cross the bottom line.

At the market's closing on Monday, several central SOEs, including China Shenhua Energy Co, posted filings expressing their determination to actively carry out the SASAC's new policy.

"The moves aim to accelerate the high-quality development of listed companies, boost investor confidence and promote a virtuous cycle of investment and financing for listed companies," a market analyst, who preferred not be identified, told the Global Times on Monday.

Highlighting the importance that Chinese policymakers attach to listed firms, the analyst said that the high-quality development of listed companies is actually an effort to promote the high-quality development of the real economy, which is a top priority for China.

Monday's remarks and announcements from senior officials and regulators came amid government measures taken to ensure the sound development of the capital market.

On Sunday, the China Securities Regulatory Commission, following a series of pledges last week to stabilize the capital market, announced the suspension of lending of restricted stocks to strengthen the supervision of short-selling and limit the efficiency of some securities lending in the securities refinancing market.

All of these moves followed an executive meeting of the State Council, the cabinet, last week, which stressed that increased medium- and long-term funds should be brought into the capital market and the inherent stability of the market should be enhanced. It also called for crackdowns on illegal activities and more effective measures to stabilize the capital market and boost investors' confidence. 

Analysts said that the moves were clearly aimed at boosting confidence, as officials and regulators appear very focused on an investor-centric approach in stabilizing the capital market.

Yang Delong, chief economist at Shenzhen-based First Seafront Fund Management Co, said that the regulatory measures all reflect the investor-oriented regulatory philosophy, as they seriously tackle various types of behavior that hurt investors' interests.

"We will likely see further strengthened law enforcement to crack down on illegal actors in the market," Yang told the Global Times on Monday.