Experts sanguine on A-share performance

Bourse watchdog announces series of tech-friendly policies to up investment

With more supportive policies to be expected later this year, confidence in A shares will be boosted and China's capital markets overall can expect more long-term improvements, experts said.

The comments came after Yi Huiman, chairman of the China Securities Regulatory Commission, announced on Tuesday that a batch of policies will be introduced to facilitate the country's high-level technological self-reliance and independence, construct modern industrial systems and carry out reforms in terms of investment practices. Measures aimed to step up supervision over key sectors of the capital markets will also be introduced.

Integrated and consolidated effects are anticipated from these policies, Yi said.

Laura Wang, chief China equity strategist at Morgan Stanley, said it is of vital importance to introduce supportive policies at this juncture, which will help stabilize the real economy and overall confidence in both the capital markets and among investors.

Companies should take the lead in helping China realize high-level technological self-reliance and independence at a faster pace, as they can address market demand more quickly. Listed companies, which usually report better business performances, should shoulder more responsibility in technological innovation, said Cheng Fengchao, a member of the academic advisory committee at the China Association for Public Companies.

Strengthened supervision over public companies, which should include stepping up accountability efforts, will benefit the capital markets over the long run and help improve listed companies' core competitiveness, said Liu Junhai, director of the Business Law Center at Renmin University of China.

A preview of policies currently in the pipeline was given at the 14th Lujiazui Forum held in Shanghai from June 8 to 9.

Yi stressed at the forum the importance of differentiated development of the STAR Market in Shanghai, the ChiNext in Shenzhen, Guangdong province, and the Beijing Stock Exchange. There should be a complete product supply covering stocks, bonds and private equities, which will promote the integration between technological innovation and capital. A multilevel capital market should be completed in China to help build a modern industrial system, he said.

A market environment in accordance with Chinese households' asset allocation capacity should be created, which is one major purpose of reform on the investment side. The regulator will stick to the ground rules of guarding against systemic risks to strengthen overall market supervision, Yi added.

Morgan Stanley's Wang said the Chinese government will introduce a number of stimulus packages over the next one to two months to secure economic growth. The Chinese onshore credit environment is now relatively relaxed thanks to the number of credit and monetary policies introduced since the end of last year, indicating adequate liquidity to further support asset prices.

Combined with the stabilizing geopolitical environment, the Chinese stock market may rebound and even perform better than other emerging markets, she added.

Li Daxiao, chief economist at Yingda Securities, said it is also important to improve relevant tax and accounting rules to incentivize more A-share investments by mid and long-term institutional investors.

Yi also emphasized on Tuesday the importance of improving the quality of public companies, especially high-quality development of Beijing Stock Exchange.

Officially launched in September 2021, the Beijing Stock Exchange had 200 companies successfully listed as of Wednesday. Zhou Yunnan, founder of private fund manager Beijing Nanshan Jingshi Investment, suggested that a comprehensive reform plan should be introduced for the BSE as soon as possible.

The exchange should be more inclusive by improving its listing efficiency. More institutions and capital should be introduced to improve the BSE's liquidity. Companies' refinancing tools should be enriched to facilitate their high-quality development, Zhou said.