stock market Photo:VCG

 
Multiple Chinese government departments rolled out on Wednesday an implementation plan,MKS sports vowing to promote inflows of medium- and long-term capital into the stock market, an effort that experts said would boost confidence and stabilize business growth.

The plan emphasized the importance of encouraging medium- and long-term investment funds - such as commercial insurance funds, the national social security fund, basic pension funds, enterprise annuity funds and public funds - to boost their presence in the stock market.
 
The initiative, jointly issued by six government departments - the office of the Central Financial Work Commission, the China Securities Regulatory Commission, the Ministry of Finance, the Ministry of Human Resources and Social Security, the People's Bank of China and the National Financial Regulatory Administration - was a follow-up to key decisions made during the Central Economic Work Conference, which emphasized "stabilizing the stock markets and resolving the bottlenecks for the entry of medium- and long-term capital into the market."

The implementation plan will be highly significant in boosting confidence in the capital market and stabilizing its operations, Li Changan, a professor at the Academy of China Open Economy Studies at the University of International Business and Economics, told the Global Times on Wednesday.

Li said that the plan focuses on many large funds as well as their long-term investment in the stock market. "Given the substantial scale of these funds and their preference for long-term and value-based investing, they are well-positioned to play a positive role in stabilizing market confidence and supporting the long-term development of the capital market," Li said.

Specifically, Wednesday's plan aims to enhance the proportion and stability of commercial insurance funds that are invested in A-shares. It seeks to guide large state-owned insurance companies to expand their A-share investments (including equity funds) in both scale and proportion.
 
A long-term performance assessment cycle of at least three years will be introduced for state-owned insurance companies, with annual net asset returns weighted no more than 30 percent and three- to five-year performance indicators weighted at least 60 percent, the plan said.
 
The plan also proposes optimizing the investment management mechanisms for the national social security fund and basic pension funds. This includes gradually increasing the proportion of equity investments by the national social security fund and implementing detailed long-term performance assessment mechanisms, such as a five-year cycle for the national social security fund and a three-year cycle for basic pension funds.
 
Efforts will also focus on improving the market-oriented operation of enterprise annuity funds. This includes accelerating the introduction of three-year or longer performance assessment guidelines for enterprise annuity funds and supporting eligible employers in exploring individual investment options for annuities.
 
Moreover, the plan aims to expand the scale and proportion of equity funds.
 
The plan also seeks to optimize the capital market investment ecosystem. This includes encouraging listed companies to increase share buybacks and implement policies for multiple dividend distributions annually, per the plan.
 
China has ramped up efforts to boost the capital market, with policy measures already taking effect last year.

For example, at last Friday's meeting, China's central bank and top securities regulator said that last year, stock buyback and repurchase loan products saw positive results. 

In 2024, nearly 300 billion yuan ($40.96 billion) in stock buyback and repurchase plans were announced by listed companies. Since the implementation of that policy tool last October, more than 300 listed companies have said that they are using bank loans for stock buybacks or repurchases, of which over 40 percent have a market value exceeding 10 billion yuan, according to the central bank.
 
The rollout of Wednesday's new plan has provided much-needed reassurance to the market, Yang Delong, chief economist at Shenzhen-based First Seafront Fund, told the Global Times on Wednesday. The expert said that the recent market adjustments have created some uncertainty, "but guiding medium- and long-term capital into the market will help restore investor confidence and encourage more participation of other investors in the market."