On the morning of September 24, the financial sector press conference held by the State Council Information Office delivered a series of significant announcements.
In addition to the timely introduction of strong policies such as reserve requirement ratio cuts, interest rate reductions, and reductions in existing housing loan rates, the central bank also indicated for the first time that it will create new monetary policy tools to support the stable development of the stock market.
The China Securities Regulatory Commission (CSRC) will introduce several new measures to promote long-term capital into the market and enhance the value of listed companies.
Governor of the People's Bank of China, Pan Gongsheng, announced three major policies at the beginning of the press conference.
First, the reserve requirement ratio and policy interest rates will be reduced, leading to a decline in market benchmark interest rates.
Second, the interest rates on existing housing loans will be reduced, and the minimum down payment ratio for housing loans will be unified.
Third, new monetary policy tools will be created to support the stable development of the stock market.
CSRC Chairman Wu Qing stated that the "Guiding Opinions on Promoting Medium and Long-term Capital into the Market" will be released soon, with a series of arrangements to support medium and long-term capital into the market.
The CSRC has also formulated the "M&A Six Articles," namely the "Opinions on Deepening the Reform of the Market for Mergers and Acquisitions and Restructuring of Listed Companies," to support corporate mergers and acquisitions and further promote the effective allocation of resources.
At the same time, Wu Qing indicated that the CSRC will soon publicly solicit opinions on market value management guidelines, and work with relevant ministries and commissions to promote the establishment of a market-oriented incentive and restraint mechanism for the repurchase of listed company shares, stimulating the internal motivation of listed company shareholders, executives, and other related parties, and further enhancing the investment value of listed companies.
The introduction of the policy package has an immediate effect on boosting the market.
Before the market opened in the morning, the FTSE China A50 index futures jumped first with the release of Pan Gongsheng's three major policies.
After the market opened in the morning, as various specific policies were announced one after another, the three major A-share stock indices quickly rose, with the Shanghai Composite Index, ChiNext Index, Shenzhen Component Index, and Beijing Stock Exchange 50 Index all rising by more than 2% by noon, with the Shanghai index recovering to 2800 points, and the ChiNext index rising by 3.45%.
The central bank's monetary policy has released a loose expectation, and for the first time, it has proposed creating new tools to support the stock market.
According to Pan Gongsheng, in terms of reducing the reserve requirement ratio and policy interest rates, the reserve requirement ratio will be reduced by 0.5 percentage points in the near future, providing about 1 trillion yuan of long-term liquidity to the financial market; this year, depending on the situation of market liquidity, it may further reduce the reserve requirement ratio by 0.25-0.5 percentage points.
The policy interest rate of the central bank, that is, the 7-day reverse repo operation interest rate, will be reduced by 0.2 percentage points, from the current 1.7% to 1.5%, while guiding the loan market quotation interest rate and deposit interest rate to move down synchronously, maintaining the stability of the net interest margin of commercial banks.
In terms of reducing the interest rates on existing housing loans and unifying the minimum down payment ratio for housing loans, he stated that commercial banks will be guided to reduce the interest rates on existing housing loans to the vicinity of newly issued loans, with an estimated average reduction of about 0.5 percentage points.
The minimum down payment ratio for first and second homes will be unified, and the national level minimum down payment ratio for second home loans will be reduced from the current 25% to 15%.
The 300 billion yuan of guaranteed housing loans created by the People's Bank of China in May, the support ratio of central bank funds will be increased from the original 60% to 100%, enhancing the market-oriented incentive for banks and acquisition entities.
The business property loans and the "Financial 16 Articles" policy documents that are due to expire before the end of the year will be extended to the end of 2026.
It is worth noting that in terms of creating new monetary policy tools to support the stable development of the stock market, Pan Gongsheng proposed that the first item is to create a swap convenience for securities, funds, and insurance companies, supporting qualified securities, funds, and insurance companies to obtain liquidity from the central bank through asset pledge, which will greatly enhance the institutions' ability to obtain funds and increase their stock holdings.
The second item is to create a special re-lending for stock buyback and increase holdings, guiding banks to provide loans to listed companies and major shareholders to support stock buybacks and increases.
Zhong Haibo, General Manager of Zhanfu Assets, said to First Financial Daily that the central bank's reserve requirement ratio cut has released market liquidity, giving the market an overall loose expectation.
The loose capital environment is also more conducive to the development of the new economy and the innovative economy, and there will be opportunities to drive the overall economy in the future.
"Of course, the prices of real estate and stock assets still need time and space to digest repeatedly, and the future interest rates may still fall, and it is necessary to wait for the market demand to improve before driving the overall economy to rise steadily," he said.
Zhu Kan, a partner of Beiyin Private Equity, said in an interview with First Financial Daily that the new policy tools include creating a swap convenience for securities, funds, and insurance companies, obtaining liquidity from the central bank through asset pledge, which helps to enhance the institutions' ability to obtain funds.
The creation of special re-lending for stock buyback and increase holdings, guiding loans to listed companies and major shareholders to support stock buybacks and increases, is also a support on the aspect of obtaining funds, and has a positive impact on the secondary market, but the actual effect may still need to be observed, such as supporting loans to listed companies and major shareholders to support stock buybacks and increases.
Now, the major shareholders are mostly not short of funds, but uncertain about the secondary market.
Some securities risk control personnel also said that the central bank expressed support, but in the process of policy implementation, it still needs to meet the risk control requirements of banks and various non-bank institutions.
A chief economist of an institution said to First Financial Daily that the central bank's creation of financial tools to support the stock market is definitely not to encourage "loan speculation," and risk control will definitely be very strict.
In his view, this may provide a certain basis for the establishment of a stabilization fund in the future.
According to people close to the central bank, the swap convenience is not a direct cash grant and will not expand the scale of the base currency.
The current "People's Bank Law" stipulates that the central bank shall not directly provide loans to non-bank financial institutions.
The swap convenience for securities, funds, and insurance companies adopts the "exchange of bills for bills" method, which not only improves the financing ability of non-bank institutions, but also does not directly provide funds to non-bank institutions, and will not issue base currency.
"These innovative policies are definitely positive for the market and are also beneficial to the development and financing of technology innovation companies, but asset prices still need time to digest," said Zhong Haibo.
Wu Qing said in the morning that he will establish a clear direction of rewarding investors and improve the quality and investment value of listed companies.
Accelerate the reform of the investment side, and promote the construction of a "long money long investment" policy system.
He also emphasized the need to create a good market ecology where medium and long-term funds "are willing to come, stay, and develop well."
According to him, by the end of August this year, the combined holdings of professional institutional investors such as equity mutual funds, insurance funds, and various pension funds in the A-share market were close to 15 trillion yuan, more than doubling from the beginning of 2019, and the proportion of A-share market value increased from 17% to 22.2%.
Among them, the National Social Security Fund is very prominent.
Since its establishment, the National Social Security Fund has achieved an average annualized return rate of more than 10% in the domestic stock market.
However, there are still prominent issues in the current capital market, such as insufficient total amount of medium and long-term funds, suboptimal structure, and insufficient leading role.
Recently, the CSRC will issue the "Guiding Opinions on Promoting Medium and Long-term Capital into the Market," focusing on three aspects to promote medium and long-term capital into the market.
First, vigorously develop equity mutual funds.
The focus is to urge fund companies to further correct their business philosophy, adhere to the investor return orientation, focus on improving investment research and service capabilities, create more products that meet the needs of the people, and strive to create long-term returns for investors.
Next, 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 medium-sized ETF fund products including ChiNext and STAR Market in a timely manner, to better serve investors and serve the national strategy and the development of new quality productive forces.
In addition, the industry will steadily reduce the comprehensive fee rate of public funds, which has been discussed a lot recently, and there are still steps to be taken after two steps.
Second, improve the institutional environment for "long money long investment."
The focus is to improve the regulatory tolerance for medium and long-term funds' equity investment, fully implement a long-term cycle of more than 3 years, and remove the institutional barriers affecting long-term investment of insurance funds, promoting insurance institutions to be firm value investors and provide stable long-term investment for the capital market.
At the same time, guide the multi-level, multi-pillar pension security system to interact positively with the capital market, improve the investment policy system of the National Social Security Fund and basic pension fund, and encourage enterprise annuity funds to explore different types of differentiated investments according to the different ages and risk preferences of the holders.
Third, continue to improve the capital market ecology.
The focus is to take multiple measures to improve the quality and investment value of listed companies, improve the supporting institutional arrangements for institutional investors to participate in the governance of listed companies, and severely crack down on various illegal and irregular behaviors, creating a good market ecology for medium and long-term funds to "be willing to come, stay, and develop well."
According to Li Yunze, Director of the State Administration of Foreign Exchange, the expansion of the reform pilot of long-term investment of insurance funds will be supported, and other insurance institutions that meet the conditions will be encouraged to set up private equity securities investment funds, further increasing the investment in the capital market.
At the same time, guide insurance companies to optimize the assessment mechanism and encourage and guide insurance funds to carry out long-term equity investment.
In addition, encourage wealth management companies and trust companies to strengthen the construction of equity investment capabilities, issue more long-term equity products, actively participate in the capital market, and cultivate and expand patient capital through multiple channels.
While clearing obstacles for medium and long-term funds to enter the market, it is also necessary to improve the attractiveness and safety of A-share investment.
According to Wu Qing, the CSRC is actively supporting listed companies to improve operational efficiency and profitability, and the State-owned Assets Supervision and Administration Commission is also increasing the assessment of market value management of central enterprise listed companies according to "one enterprise, one policy."
Listed companies must strive to improve the transparency of information disclosure and the standardization of corporate governance, strengthen communication with investors, and should comprehensively use dividends, buybacks, and other methods to reward investors.This year, more than 95% of listed companies have held performance briefings, with 663 companies announcing mid-term dividends totaling 533.7 billion yuan, and over 1,500 companies have actually carried out share buybacks exceeding 100 billion yuan.
At the same time, to improve the quality of listed companies and enhance investment value, listed companies must take on their responsibilities.
"Currently, we have worked with relevant ministries and commissions to formulate guidelines for market value management of listed companies, requiring them to manage market value in accordance with the law," said Wu Qing.
Firstly, it is required that the board of directors pay great attention to investor protection and returns, and solidify the foundation of market value management by improving management levels, profitability, and core competitiveness.
Secondly, listed companies are encouraged to actively use market value management tools such as mergers and acquisitions, equity incentives, and major shareholder increases to enhance investment value.
Thirdly, listed companies are required to establish a regular mechanism for share buybacks and encourage companies with conditions to plan and reserve funds in advance.
Fourthly, companies that have been undervalued for a long time are required to formulate a value enhancement plan, assess the implementation effects, and disclose them publicly to form market constraints.
Fifthly, companies that are major components of stock indices are required to take on their responsibilities, formulate market value management systems, clarify responsibilities and response measures, and disclose the implementation status regularly.
In addition, mergers and acquisitions are also an important way for listed companies to enhance value.
Wu Qing said that the Securities Regulatory Commission will soon introduce the "M&A Six Articles," strongly supporting listed companies to upgrade and transform in the direction of new quality productive forces, actively encouraging listed companies to strengthen industrial integration, further increase regulatory tolerance, and make great efforts to improve the efficiency of reorganization market transactions, so as to better play the main channel role of the capital market in mergers and acquisitions.
