Guideline seen easing market jitters
Joint efforts to facilitate the healthy development of A-share companies will translate into investor confidence and long-term impetus for the stock market, experts said on Tuesday.
On Monday, the China Securities Regulatory Commission, the State-owned Assets Supervision and Administration Commission of the State Council, and the All-China Federation of Industry and Commerce jointly released a guideline of 12 measures to address the current uncertainties and challenges as well as stabilize expectations and market performance.
On Tuesday, the benchmark Shanghai Composite Index gained 1.46 percent with the Shenzhen Component Index up 2.05 percent and the tech-heavy ChiNext up 2.5 percent, with market mavens attributing the rises to the perception among equity players that Monday's guideline is a positive.
The guideline stated that systematic arrangements should be optimized for long-term institutional investors. Social security, pension fund, trust, insurance and wealth management institutions are encouraged to direct more capital to equity assets, especially to quality companies' stocks.
By adhering to the principle of "housing is for living in, not speculation", listed property developers are encouraged to explore new development models and deal with various risks properly.
All the market entities will be treated equally, and no additional conditions or invisible thresholds will be set for any company. Privately owned enterprises are encouraged to go in for lawful IPOs, mergers, restructuring and bond issuances. The vitality and creativity of privately owned enterprises should be boosted. These companies should play a bigger role in terms of stabilizing economic growth, stimulating innovation, providing more job opportunities and improving people's livelihoods, the guideline stated.
It is aimed to stabilize companies' confidence, especially that of privately owned enterprises, said Shao Yu, chief economist at Orient Securities.
Meanwhile, the SASAC said it will provide support and guidance to listed State-owned enterprises on share repurchases and cash dividend payments.
Regulators have expressed support for listed company share buybacks serving employee incentive plans. Listed companies' majority shareholders, chairpersons and supervisors should increase their exposure to the company when share prices are declining dramatically. Cash dividend payments should be increased so that investors can have a sense of more gains. While strictly following all the related requirements, share sale plans should be made with more prudence, the regulators said.
CSRC Chairman Yi Huiman also mentioned during a meeting on Saturday that the improving quality of Chinese listed companies should be demonstrated by their capabilities in creating and distributing value. Listed companies should continue cash dividend payments and buybacks so that investors can have a sense of more gains.
Data from market information provider Easy Board showed that at least 140 A-share companies announced buyback plans in the first quarter of this year, with their total value approaching 42.6 billion yuan ($6.7 billion).
Policy arrangements can be expected for companies located in COVID-hit areas or those specializing in epidemic control and prevention. Listed companies will be exempted from expenses like annual fees and proxy voting services fees for this year, the guideline stated on Monday.
Chen Li, the chief economist of Chuancai Securities, said the policies aiming to mitigate the negative impact of the epidemic will help stabilize market expectations and lead to growth in the mid to long run.
