China’s top securities regulator has pledged to widen foreign investors’ access to the mainland’s capital market while further lowering the fundraising threshold for technology firms, after a key indicator slumped nearly 4 per cent from a 10-year high in mid-November.
Wu Qing, chairman of the China Securities Regulatory Commission (CSRC), set out guidance for the equity and bond markets in an article published by the Communist Party mouthpiece People’s Daily on Friday, three weeks after he was reported to have offered his resignation.
The Chinese capital market requires a “deep transformation” to enhance its “inclusiveness and adaptability”, Wu said, calling for a regulatory environment where medium and long-term funds “are willing to come, can stay and can develop well” amid market volatility.
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He also highlighted the role of private equity and venture capital, pledging to smooth the “fundraising, investment, management and exit” cycle to ensure efficient capital flows into strategic sectors.
“The article aims to bolster domestic and international investors’ confidence in China’s capital markets,” said Ding Haifeng, a consultant at Shanghai-based financial advisory firm Integrity. “It also reaffirms Wu’s role in leading the regulatory commission despite speculation about his resignation.”
Wu Qing’s article aims to bolster domestic and international investors’ confidence in China’s capital market, according to an analyst. Photo: EPA alt=Wu Qing’s article aims to bolster domestic and international investors’ confidence in China’s capital market, according to an analyst. Photo: EPA>
The benchmark Shanghai Composite Index hit a 10-year high in November, closing at 4,029.5, up 20.2 per cent from last year’s close, buoyed by a trade truce between Beijing and Washington and heightened expectations for improved company fundamentals.
To accommodate the characteristics of technology companies – including their heavy cash needs for research and development, high operational uncertainty and long profitability cycle – the CSRC aims to provide more precise support for hi-tech enterprises seeking listings through ongoing reforms of the tech-heavy Star Market and the ChiNext board.
