According to Bloomberg article published on October 17, 2022, Chinese regulators are planning to launch a series of market-supporting measures to arrest a slump in equities pressured by escalating geopolitical tensions and Beijing’s strict Covid Zero policy.
That includes a proposal to encourage listed companies to buy back shares, as well as moves to ease curbs on short-term transactions by overseas mutual funds. The plans, which were announced in recent days, come as China’s benchmark CSI 300 Index is hovering near the lowest since the early days of the pandemic.
Following the proposals, at least five mutual funds including E Fund Management Co., Southern Asset Management Co. and China Universal Asset Management Co. announced plans on Monday to invest in their own equity products.
Stock investors have been looking for fresh market impetus after suffering losses that have been among the worst in the world due to the impact of rolling Covid lockdowns on the economy, the Federal Reserve’s aggressive tightening path and souring Sino-US trade tensions. A lack of directional change in key areas during President Xi Jinping’s speech at the Party Congress meeting on Sunday failed to lift broader sentiment.
While the changes may help stem further losses, it may not be enough for a turnaround, said Yan Kaiwen, an analyst with China Fortune Securities. “What we expect to see are clearer policy signals from the Party Congress that can help lift economic growth in the fourth quarter.”
China’s securities regulator is planning to ease restrictions on short-term stock transactions by overseas mutual funds, according to a report Monday by the state-run China Securities Journal, citing regulatory sources. Authorities are also allowing overseas funds to conduct short-term trades if their stake in a listed firm is held by multiple fund products issued by the same management company.
That comes after the the China Securities Regulatory Commission said last week it is reviewing changes in relevant laws to allow firms to buy back stakes six months after being listed, down from 12 months currently. Companies would also be allowed to buy back stakes when stock prices fall 25% instead of 30% over 20 trading sessions.
Meanwhile, in related news, China Securities Index Co., the compiler of equity gauges, also said last week it would revise the compilation plans of 16 indexes, including the CSI Dividend Index, in order to improve their “investability”.
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Published on October 17, 2022 4:09 PM (GMT+8)Last Updated on October 17, 2022 4:10 PM (GMT+8)
