China Unveils New Measures to Boost Capital Market Development

The CSRC (China Securities Regulatory Commission) and China's two main stock exchanges have announced a series of new measures aimed at promoting the capital market. 

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The efforts are aimed at bolstering market confidence amid the Covid-19 outbreaks in China and rising risks and uncertainty from the war in Ukraine. China's Politburo recently vowed to focus efforts on maintaining stable growth and development, including in the capital market.

In a notice, the CSRC said it will make greater efforts to help stabilise the capital market, including by normalising IPOs and refinancing, and faciltiating the issuance of corporate bonds by innovative technology companies, SMEs and real estate companies.

The regulator also said it would broaden interconnections between domestic and foreign markets, including by strengthening cooperation between mainland and Hong Kong capital markets, and promoting a new supervision system for overseas listings by Chinese companies.

The CSRC added that it will seek to promote the registration-based system IPO system, enrich market risk management tools such as futures and options, and leverage institutional investors to stimulate market vitality.

A new market-making system will also be launched on Shanghai's STAR Market, a measure reiterated in a separate notice from the SSE (Shanghai Stock Exchange).

In its notice, the SSE said it will study the painpoints experienced by domestic enterprises, local and foreign investors, and other market entities – with a view to introducing targeted measures to address these challenges.

The SSE added that it will actively support bond financing of real estate companies, expand the scope of infrastructure REITs pilots, improve the transparency of listed companies, promote the concepts of value investment and long-term investment to investors, and encourage asset management companies to buy more stock.

Separately, the SZSE (Shenzhen Stock Exchange) issued a notice outlining similar plans to support the financing needs of SMEs and real estate companies, and improve the bond financing mechanism of private firms.

The SZSE will also encourage existing listed companies to buy back shares, while their major shareholders, directors, supervisors, and senior executives are also encouraged to increase their stock holdings, to "enhance the confidence of all parties in the market".