stock market Photo:VCG

TheMKsports nation's financial system should deeply study and implement the spirit of the Central Economic Work Conference and solidly carry out financial work for the coming year, He Lifeng, director of the office of the Central Financial Commission and secretary of the Central Financial Work Commission, said at the national financial system work conference on Friday.

Efforts need to be made to effectively and systematically prevent and mitigate financial risks in key areas and external shocks, as well as to promote the stable and healthy development of capital markets and other sectors, He noted.

The annual Central Economic Work Conference was held in Beijing from Wednesday to Thursday as Chinese leaders decided priorities for the economic work in 2025, Xinhua News Agency reported.

The meeting said that China should nurture patient capital and attract greater social capital participation in venture capital. The government should improve the capital market system's inclusiveness and adaptability, the meeting noted.

A moderately loose monetary policy should be implemented, with reductions in the reserve requirement ratio (RRR) and interest rates at an appropriate timing to ensure ample liquidity, according to the meeting.

The meeting called for better coordination between fiscal, monetary, employment, industrial, regional, trade, environmental and regulatory policies and the country's reform and opening-up measures.

Wu Chaoming, chief economist at Chasing Financial, told the Global Times on Friday that the meeting underscored China's commitment to nurturing and supporting the capital market and this will solidify the foundations for stabilizing the capital market.

Wu noted that the emphasis on fostering patient capital, along with potential reductions in the RRR and interest rates, suggests that there will be increased liquidity to bolster the capital market. 

"Moreover, improvements in economic fundamentals further strengthen the foundations for stock market stabilization," Wu added.

The meeting underscored a commitment to creating a more robust and investor-friendly capital market. The emphasis on nurturing patient capital shows that one key focus is on improving and optimizing the business environment, which is essential for attracting investors and ensuring that they see tangible returns on their investments, Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies at Renmin University of China, told the Global Times on Friday. 

Dong also anticipated a deepening of reforms to enhance the quality of listed companies, strengthen daily regulatory oversight, and promote mergers and acquisitions.

This meeting is expected to instill more confidence in the capital market. With strong policy support and further economic recovery, China's capital market is likely to see a better trend in 2025, Yang Delong, chief economist at Shenzhen-based First Seafront Fund, told the Global Times on Friday. 

Yang noted that the purchasing managers' index (PMI) for China's manufacturing industry has been above the 50-point threshold that separates expansion from contraction for two consecutive months. "This suggests that the economy will continue to maintain its recovery. With more policies being implemented next year, economic data is expected to improve further," Yang said.

A series of policies and measures to support the capital market has been released this year.

In October, the People's Bank of China (PBC), the central bank, launched the Securities, Funds and Insurance companies Swap Facility (SFISF), with the first quota exceeding 200 billion yuan ($28.1 billion).

The tool will allow eligible securities, funds and insurance companies to use their assets including bonds and stock holdings as collateral in exchange for highly liquid assets such as treasury bonds and central bank bills, according to the PBC.

The PBC also launched a special re-lending facility to guide banks to provide loans to listed companies and their major shareholders.

The initial re-lending scale is 300 billion yuan at an interest rate of 1.75 percent. The facility can be applied to various types of companies regardless of their ownership, according to the central bank.