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E-mail China.org.cn, October 18, 2024
China Securities Journal:
The third plenary session of the 20th CPC Central Committee proposed improving the functions of the capital market to give balanced weight to investment and financing, and to facilitate the entry of long-term capital into the market. Relevant authorities have also been calling for and promoting long-term investment and value investment. What will be done next to better advance the entry of long-term capital into the market to promote balance between investment and financing?
Wu Qing:
Let me answer this question. Long-term capital is indeed extremely important. Medium and long-term capital investment operations have a high degree of specialization and strong stability, which is of great significance for overcoming short-term market fluctuations and playing the role of "stabilizer" and "ballast" in the capital market. In recent years, the CSRC has vigorously advanced the development of public equity funds and has worked with relevant parties to promote the entry of medium- and long-term funds into the market, achieving some phased results. By the end of this August, the total A-share market capitalization held by professional institutional investors such as equity public funds, insurance funds and various pensions was nearly 15 trillion yuan, more than double that at the beginning of 2019, and the proportion of which in the A-share market increased from 17% to 22.2%. Among these, the National Social Security Fund is very prominent. Since its establishment, the average annualized rate of return of the National Social Security Fund has exceeded 10% in the domestic stock market, becoming an exemplar of long-term investment and value investment in the A-share market.
At the same time, we also see that there are still prominent problems in the capital market. These include insufficient medium- and long-term funds, sub-optimal structure, the leading role has not been given full play, and the institutional environment for "long-term investment of long-term capital" has not yet been fully established. In order to implement the guiding principles of the third plenary session of the 20th CPC Central Committee and further remove the barriers that affecting the entry of the medium- and long-term capital into the market, with the strong support of relevant ministries and ministerial-level commissions, the CSRC and other relevant departments have formulated guidelines to promote medium- and long-term capital into the market, which will be issued in the near future. The guidelines include a series of arrangements to support the entry of medium- and long-term capital into the market, and it is believed that the institutional environment will continue to be optimized. In general, it focuses on the goal of "more long-term capital with longer terms and better returns" and further promotes the entry of medium- and long-term funds into the market. The soon-to-be-published guidelines give priorities to measures in three aspects:
First, we will strive to develop public equity funds. We will give priority to urging fund companies to further adopt the right approach to growing businesses, adhere to the orientation of investment return, improve investment research and service capabilities, create more products that meet the needs of the people, and strive to create long-term returns for investors. Recently, you may have also noticed that 10 new CSI A500 exchange-traded funds (ETFs) were approved, which have been very popular with the market and soon reached the limit for fundraising. Next, we will further optimize the registration of equity fund products, vigorously promote the innovation of index products such as broad-based ETFs, and launch more small- and mid-cap ETF fund products, including ChiNext and STAR Market in a timely manner, to better serve investors, the national strategy and the development of new quality productive forces. In addition, we will promote the steady reduction of the general rate of the public equity fund sector, which is also an issue that has been discussed a lot recently. We have now taken two steps, and there is still one step remaining. By steadily lowering the general rate, we can better benefit and reward investors.
Second, we will improve the institutional environment for "long-term investment of long-term capital." We will give priority to improving the inclusiveness of supervision over medium- and long-term capital equity investment, and fully implement long-term assessments of three-years and above. We will remove the institutional barriers to long-term investment of insurance funds and propel insurance institutions to be firm value investors, to provide stable long-term investment for the capital market. At the same time, we will guide the sound interaction between multilevel and multi-pillar aged-care social protection system and the capital market, improve the investment policy system for national social security funds and basic old-age insurance funds, and encourage annuity funds to explore different types of differentiated investment according to the different ages and risk preferences of holders.
Third, we will continue to improve the ecology of the capital market. We will give priority to taking multiple measures to enhance the quality and investment value of listed companies and improve the supporting institutional arrangements for institutional investors to participate in the governance of listed companies. At the same time, we will crack down on all kinds of violations of laws and regulations and foster a sound market ecology in which medium- and long-term capitals are "willing to come and stay and can develop well."
Next, we will work with relevant ministries and ministerial-level commissions as well as relevant units to step up efforts to ensure the implementation of all measures. Thank you.
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