Wu Qing, chairman of the China Securities Regulatory Commission, answers a question at a press conference during the second session of the 14th National People's Congress in Beijing on March 6, 2024.
Wang Chao | AFP | Getty Images
China's financial regulators on Thursday It revealed a large number of measures To urge mutual funds and large state-owned insurance companies to buy more shares, as Beijing seeks to prop up a faltering stock market.
Major state-owned insurance companies are directed to increase the size and proportion of their investments in mainland-listed stocks To allocate 30% of their newly generated premiums Investors are turning to buy stocks, Wu Qing, head of the China Securities Regulatory Commission, said at a press conference on Thursday.
The pilot program, scheduled to start in the first half of this year, will direct at least 100 billion yuan ($13.75 billion) from insurance companies into long-term equity investments, Wu said. He expected the program to continue to expand and to pump at least “hundreds of billions of yuan” each year into stock purchases.
Mutual funds are too And assign them to raise their property He said that stocks listed on the mainland will increase by 10% annually in terms of market value for the next three years.
A consortium of six financial regulatory bodiesCNBC, including the securities regulator, first rolled out a plan on Wednesday to direct large funds, including pension funds, to buy more local stocks, with the aim of “stabilizing the stock market,” according to a CNBC translation of a Chinese-language statement from the regulators.
“Having institutions such as insurance companies own more Chinese stocks helps reduce volatility and create a more stable fundamentals-based trading environment,” said Eugene Hsiao, head of China equity strategy at Macquarie Capital.
He pointed out that the latest initiative will help “create more attractive investment options in the long term,” after the collapse in the real estate market harmed household wealth.
Following the press conference, the benchmark CSI 300 index rose more than 1.8%, narrowing the index's decline this year to about 2.7%, according to LSEG data.
While the CSI index recorded 300 Annual profits of 15% last year The index ended the year with a decline of approximately 12% from its highest levels during the year.
Beijing's recent partial stimulus measures dashed investors' hopes for a near-term turnaround in the faltering economy, sending money flowing into safe-haven government bonds, sending yields down to record lows.
In October, China's central bank launched Swap facility scheme for granting insurance companies It is easy for brokers to buy shares and relatively cheap central bank warrants to help finance the purchase and repurchase of shares of listed companies.
Wu said Chinese corporate dividends and share buybacks last year reached record levels, while listed companies were encouraged to raise dividends in the run-up to China's Lunar New Year later this month.
Wu noted that the current dividend yield for the CSI 300 is 3%, “which is much higher than the 10-year Treasury yield.” The benchmark 10-year yield reached 1.671 on Thursday.
Thursday's announcements are expected to trigger a flow of capital into Chinese “value stocks,” which are considered undervalued given the high potential for future growth, according to Li Ming, China equity strategist at UBS.
