2024-01-23 02:59:52
On January 22, Premier Li Qiang chaired the State Council Executive Meeting (hereinafter referred to as the “Standing Meeting”) to hear reports on the operation of the capital market and work considerations.
This is the first time that the new government has listened specifically to a report on the operation of the capital market. It is also the second time in the past six months that the capital market has been mentioned in the National Standing Committee.
The meeting made clear arrangements from four aspects. They are to further improve the basic system of the capital market and pay more attention to the dynamic balance of investment and financing; strengthen capital market supervision; take more powerful and effective measures to stabilize the market and stabilize confidence; enhance the consistency of macro policy orientation and promote the stable and healthy development of the capital market.
As for the latest arrangements made by the Standing Committee of the State Council to focus on the capital market, market participants have said that the Standing Committee of the State Council has prescribed appropriate remedies for the problems faced by the A-share market in the short and medium term, reflecting the management’s emphasis on the capital market. The window for increasing policy intensity has been opened to actively guide long-term It is the right time for funds to enter the market. In particular, the issue of balancing both investment and financing ends is mentioned. When the market experiences a negative spiral of funds and pessimistic sentiment, it will help calm market fluctuations and boost investor confidence.
The National Standing Committee mentioned the capital market for the second time in six months
Affected by multiple factors, the recent turbulent operation of the secondary market has pointed out that more powerful and effective measures must be taken to promote the stable and healthy development of the capital market.
This is the second time that the National Standing Committee has mentioned the capital market since July 31 last year. On July 31, 2023, the State Council executive meeting emphasized the need to activate the capital market and boost investor confidence.
“Since setting the tone in July, we have seen a package of policies being introduced with high frequency. These policies played a vital and positive role in activating the market and stabilizing confidence at that time.” Zheng Kai, co-chief analyst of strategy at GF Securities Development Research Center express.
Specifically, the first is that the trading side focuses on reducing the frictional costs of market transactions, such as halving stamp duties, restricting investment and allocation lending, and new regulations on holding reductions; the second is that the financing side focuses on countercyclical adjustments in the primary and secondary markets, such as IPOs and refinancing. Slow down and encourage the optimization of the dividend repurchase mechanism; third, the investment side focuses on the entry of medium and long-term funds into the market, such as public offerings and self-purchase and pension funds.
Zheng Kai pointed out that since the beginning of 2024, the market has once again been affected by multiple factors and has been weak and volatile. Especially during the period when policy expectations are unstable, the decline of the market will trigger a negative spiral in capital, thus triggering greater market fluctuations. To some extent, it has deviated from the current stable operation of China’s economic fundamentals, and also contains highly volatile and pessimistic financial expectations.
“At this time, the State Council once again mentioned the capital market, especially the issue of balancing both investment and financing. At a time when the market is experiencing a negative spiral of funds and pessimistic sentiment, it will help calm market fluctuations and boost investor confidence. “Zheng Kai thinks so.
“Compared with the global market, the current valuation of Chinese stocks is relatively undervalued, but trading volume is still sluggish, which to a large extent also implies pessimism about policy expectations and uncertainty about financial market positioning expectations.” Zheng Kai Emphasizing that the National Standing Committee has alleviated the market’s concerns about the above issues to a certain extent, that is, it fully affirmed the importance of stabilizing the capital market, which is a positive policy signal for the current market environment with fragile confidence.
Fu Jingtao, chief strategist of Shenwan Hongyuan, said that the capital market was mentioned again at the State Council meeting, which reflects the management’s emphasis on the capital market, covering systemic risks, stabilizing market expectations, and the window for increasing policy intensity has been opened.
“Prescribing the right medicine” to accelerate the recovery of market confidence
This State Council meeting made active arrangements to improve the basic system of the capital market, improve the quality of listed companies, increase the entry of medium and long-term funds into the market, and strengthen supervision.
Fu Jingtao pointed out that the Standing Committee of the State Council particularly emphasized “paying more attention to the dynamic balance of investment and financing” and “creating a standardized and transparent market environment.” In the future, based on shareholder returns as the standard, a number of new core assets are expected to enter the horizons of investors, driving the market’s main line to be clear, and it is estimated that value repair.
“Emphasis on corporate governance and shareholder returns is becoming a trend of thought. Especially in the new economic direction, investors at this stage pay special attention to the balance between financing and shareholder returns. This is reflected in the short term as a decline in risk appetite in the new economy industry and a fall in the valuation center. “Fu Jingtao said that there is no doubt that finance supports the real economy and supports the direction of economic transformation. But the other side of leveraging the financing function is to optimize the investment function. Under the guidance of “China Special Evaluation”, high-quality companies in mature industries are providing increasingly generous shareholder returns.
In Zheng Kai’s view, the current market environment has caused unstable market confidence due to negative feedback on funds. Therefore, in the future, more efforts will be made to achieve “a balance between investment and financing”, which is the core issue of market concern. Mentioning this statement at this time is also of extraordinary significance for stabilizing confidence in the capital market.
Zheng Kai believes that for the financing side, the most direct way to boost investor confidence is to improve the countercyclical adjustment mechanism of the primary and secondary markets through a series of measures, reasonably grasp financing behaviors, and encourage listed companies to return “real money” to shareholders. feedback.
Zheng Kai pointed out that for the investment side, long-term funds and capital market construction are in a relationship of mutual promotion and coordinated development. On the one hand, long-term funds provide financing support for national strategic industries and China’s advantageous enterprises; on the other hand, stable capital markets and the healthy development of high-quality companies also provide investment returns for long-term funds.
“Therefore, this State Council proposed to further increase the entry of medium and long-term funds into the market, which is an important way to promote the healthy development of the investment side.” Zheng Kai concluded.
In this regard, Fu Jingtao also pointed out that the policy layout of the National Standing Committee and the targeted treatment of the problems faced by the A-share market in the short and medium term may accelerate the recovery of market confidence. There is no doubt that the short-term market is in historically high cost-effective territory.
“The market is worried that demand will be inelastic upward in 2024, and supply pressure will remain high. However, such fundamental concerns have been fully reflected in short-term adjustments. The long-term price/performance ratio of the market is comparable to historical lows. The short-term oversold signal is clear, There is an inherent demand for repair in the market,” Fu Jingtao said.
“At a time when both long- and short-term cost performance is high, it is an excellent time for long-term allocation, and it is time to actively guide long-term funds into the market.” Fu Jingtao pointed out.
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(Source of the article: CCTV)
Source of article: cctv.com
Author of the article: Cao Qian
Original title: The Standing Committee of the National People’s Congress has made the latest deployment of policies on the capital market. It is time to step up efforts to stabilize market fluctuations and attract long-term funds into the market.
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