Chinese regulator vows to boost ‘vitality, efficiency and appeal’ of stock market in response to Politburo meeting

The pledge comes as the CSRC responds to a rare reference to boosting capital markets made after a Politburo meeting on July 24

CSRC support for listings by Chinese US-listed companies in Hong Kong expected to instil some confidence in Hong Kong stocks

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The CSRC offices in Beijing. The regulator will, among other measures, lower the threshold for the launch of index-based funds, encourage mutual-fund firms to further lower management fees, and guide big industry players to sell more stock-based funds, it says. Photo: Getty Images

Published: 8:15pm, 18 Aug 2023

China’s stock market regulator has promised to help the country’s US-traded companies list in Hong Kong, refine fundraising procedures and enhance cross-border investment channels to inject some life into the slumping stock markets in mainland China and Hong Kong.

The China Securities Regulatory Commission (CSRC) will also allow onshore investors to participate in the dual-counter trading model that allows Hong Kong-listed stocks to be traded in yuan, and it will launch index futures linked to Chinese government bonds and option products with yuan stock as underlying assets in the city, it said in a statement posted on its website in a question and answer format on Friday.

The CSRC also pledged to facilitate financing by technology companies, to encourage more dividend payouts among domestically listed companies and to guide more long-term capital into the market.

The CSRC aimed to “boost the vitality, efficiency and appeal of the market, maintain the trend of the steady and sound development of the capital market, and achieve a good interaction between the capital market and the economy”, it said in the statement.

The measures come as the CSRC responds to a rare reference to boosting capital markets made during a Politburo meeting chaired by Chinese President Xi Jinping on July 24. A slumping stock market could further cloud the outlook for the world’s second-largest economy, which is grappling with deflationary pressure and a weakening property market. A waning wealth effect from the stock market could further shatter confidence by weakening consumption and crippling demand.

The Hang Seng Index has dropped 9.3 per cent this year, making it Asia’s top loser and the fifth-worst performer among global indexes. The mainland’s benchmarks have also declined. The CSI 300 has dropped 2.3 per cent in this period, while a gauge tracking the bourse in Shenzhen, China’s technology hub, has sunk by 5 per cent.