Experts: Well-calibrated measures key to further enhance market stability

The central government's continued attention in the capital market will ensure the sector's stable operations and accelerate the introduction of more favorable policies, experts said on Tuesday.

Well-calibrated measures will be taken to anchor market expectations and boost investor confidence, according to a State Council executive meeting chaired by Premier Li Keqiang on Monday.

By adhering to market-oriented, law-based and internationalized principles, problems concerning capital market operations should be properly addressed so that market players can thrive in a stable, transparent and predictable environment, Li said.

The meeting also noted that the impact of shifting international situations on the capital market should be closely watched and necessary contingency plans readied.

On March 16, the State Council's Financial Stability and Development Committee had delineated its stance on five topics: macroeconomic operations, real estate, US-listed Chinese companies, the platform economy and Hong Kong's financial stability.

On the same day, the China Securities Regulatory Commission, the country's top bourse watchdog, also expressed its support for Chinese companies' overseas financing. Similar support was heard on the same day from the People's Bank of China, the country's central bank, as well as the China Banking and Insurance Regulatory Commission. The PBOC called for coordinated efforts from different bodies to stabilize the capital market; the CBIRC encouraged direct financing.

The capital market has been playing an increasingly important role in China's economic growth. It is thus crucial to guide market expectations in a rational way while preventing risks, said Chen Li, chief economist at Chuancai Securities.

Shao Yu, chief economist of Orient Securities, said the State Council's executive meeting has "upgraded" the March 16 decisions of the Financial Stability and Development Committee, as stable market operations and anchored expectations are the top priority of all government work at present.

The executive meeting also noted that prudent monetary policy will be strengthened to provide greater support to the real economy. Liquidity will be kept reasonably ample, and policy consistency will be maintained. The renminbi exchange rate will be kept generally stable at an adaptive and balanced level.

Shao said market response will likely be considered before introducing or adjusting monetary policy by policymakers.

All these measures are aimed at returning market performance to the right track where fundamentals reign supreme. A steady renminbi exchange rate will stabilize the valuation of yuan-denominated assets and consolidate overseas investors' confidence. China's macroeconomic fundamentals and listed companies' performance will be less impacted by market sentiment, he said.

Yang Chengzhang, chief economist of Shenwan Hongyuan Securities, said policies aiming to expand fiscal expenditure and stabilize currency growth can be expected soon.