Efforts being made to boost capital market

Amid continued reform and opening-up, China's capital market will play an increasingly important role in supporting the development of new quality productive forces and the country's economic transformation, said experts and industry mavens.

Their comments were made on Friday, when Wu Qing, chairman of the China Securities Regulatory Commission, released an op-ed in People's Daily, saying that efforts will be made to further improve the institutional inclusiveness and adaptability of the Chinese capital market.

These are of much significance in better serving the development of new quality productive forces, in extending the fruits of China's development to more people, and in building a higher-level open economy, as Wu wrote in the article.

Therefore, by better coordinating investment and financing, deepening opening-up and securing market stability, efforts should be made to actively develop direct financing methods such as equities and bonds and nurture more public companies reflecting China's high-quality economic development. The institutional environment should be more amiable to long-term investment amid more effective market supervision, according to Wu.

Wu's comments are of great importance to the Chinese market, especially ahead of the Central Economic Work Conference, according to Ming Ming, chief economist of CITIC Securities, adding that systematic deployment regarding consumption, technology innovation, coordination of fiscal and monetary policies and resolution of property market risks can be expected from this meeting.

The meeting may set short-term targets on stabilizing growth and market expectations, while the medium-term goals will center on the optimization of industrial and investment structures. The long-term policies will focus on the development of new quality productive forces and new growth models, said Ming.

The Chinese capital market has been accelerating its transformation from a conventional financing venue to a booster of industrial upgrading and innovation. Through this process, investors have been attaching greater importance to companies' innovation capability and growth potential, which in turn helps to guide more market resources to new quality productive forces, said Yang Chao, chief strategist of China Galaxy Securities.

Niamh Brodie-Machura, chief investment officer for equities at Fidelity International, believes that China's innovation in general and companies' increasing deployment of emerging technologies such as artificial intelligence will play a bigger role in the country's economic growth. The recent earning inflection of A-share companies, combined with the companies' lower valuation if compared to their global peers, have pointed to an attractive entry point for investors, she said.

According to Chen Guo, chief strategist of Eastmoney Securities, the value of insurance capital flowing into the Chinese equities market has been increasing rapidly over the past few months. More long-term capital managers have set up longer-cycle assessment mechanisms. The strategy of investing in both stocks and funds has been adopted by more investors. The continued inflow of such long-term capital is likely to further drive up the market performance, he said.

The positive market performance on Friday can serve as the latest proof. While the benchmark Shanghai Composite Index closed 0.7 percent higher and Shenzhen Component Index was up 1.08 percent, A-share insurers reported the strongest daily gain of 5.36 percent on average.

Robin Xing, chief China economist at Morgan Stanley, said that institutional investors best represented by insurers and asset managers brought in about 1.5 trillion yuan ($212.16 billion) of incremental capital into the A-share market in the first half of this year. About 800 billion yuan of household savings have been directed to equity-focused wealth management products since June.

But it should be noted that China has accumulated over 30 trillion yuan of excess savings over the past five years. The direction to equity assets in China has just begun. There is more possibility of diversified asset allocations, he said.

The continued institutional opening-up can help to make the Chinese capital market more attractive to global investors. Global investors' stronger confidence in yuan-denominated assets can help diversify risks, improve corporate governance and elevate capital market efficiency, which is conducive to the development of the real economy, said Tian Xuan, dean of the National Institute of Financial Research at Tsinghua University.

Therefore, the A-share market's information disclosure standards should be further aligned with international ones. The negative list mechanism for foreign investors should be completed while property rights protection and dispute resolution mechanisms should be further optimized, he said.