China’s securities watchdog renews call that firms buy back shares, asks major shareholders to support stock prices amid sluggish stock market
- The regulator suggests it will also look at stock and bond issue plans favourably to help fund buy-backs
- Regulator also wants social security funds, pension funds, trusts, insurance companies and wealth management institutions to increase investment in capital markets
China’s securities watchdog wants listed companies to repurchase their own shares and their major shareholders to support stock prices amid efforts by Beijing to stabilise the country’s sluggish stock markets.
The China Securities Regulatory Commission (CSRC) encouraged company boards to repurchase shares and create stock incentives and ownership plans for employees to shore up sentiment, according to a statement issued late on Monday. The regulator indicated it will also look at stock and bond issue plans favourably to help fund buy-backs.
The statement was released jointly with state assets supervisor State-owned Assets Supervision and Administration Commission of the State Council and the All-China Federation of Industry and Commerce, a chamber of commerce that helps the central government manage China’s private sector.
“[The CSRC] encourages major shareholders, directors, supervisors and executives to hold listed companies’ shares for the long term, and to stabilise stock prices actively by increasing stakes when their companies’ stocks experience big drops,” the commission said.
China’s new audit rules don’t answer all of US-listed firms’ prayers
The commission has sought such intervention before as well. Last month, it asked publicly traded companies to buy back their own shares and money managers to invest in their own funds. In Monday’s statement, the CSRC also encouraged major shareholders, supervisors and executives to step in and buy stocks to uphold prices. It also specified the role it wanted entities such as social security funds to play, and listed the specific directions that it would work on.
China’s market regulator chimes in with support after stocks rout
Vice-premier Liu He last month vowed support for the capital markets and economic growth. The government said it will “actively release policies favourable to markets”.
The CSRC also said it wanted social security funds, pension funds, trusts, insurance companies and wealth management institutions to increase investment in the capital markets.
Listed firms should also increase the proportion of dividend sharing in their overall net profit allocations, the CSRC said, as Beijing is aiming for more Chinese stocks to be included in global indices such as those compiled by MSCI. Chinese firms included in the CSI 300 index were expected to pay a record US$157.2 billion in dividends last year, according to an S&P Global Market Intelligence study released last week.
