Xinhua News Agency, Beijing, January 23, Title: Medium- and long-term funds enter the market to build a strong foundation for the stable development of the capital market

Xinhua News Agency reporters Liu Hui and Liu Yujia

Recently, after review and approval by the Central Financial Committee, the Central Financial Office, the China Securities Regulatory Commission, the Ministry of Finance, the Ministry of Human Resources and Social Security, the People's Bank of China, and the State Administration for Financial Regulation jointly issued the "Implementation Plan for Promoting the Entering of Medium- and Long-term Funds".

The plan aims at the blocks and bottlenecks of medium- and long-term funds entering the market, and smoothes the "road" of medium- and long-term funds entering the market through more detailed and specific policy arrangements. These arrangements for medium- and long-term funds entering the market will not only bring more long-term and stable incremental funds to the market, but will also stabilize market expectations and build a solid foundation for the stable development of the capital market.

Wu Qing, Chairman of the China Securities Regulatory Commission, introduced at the State Information Office press conference on the 23rd that the implementation plan is based on the present and has determined clear indicators for various medium- and long-term funds to increase the actual scale and proportion of investment in A-shares; and also looks at the long-term, and makes targeted institutional arrangements from the aspects of establishing an assessment system, investment policies, and market ecological construction that adapts to long-term investment. "It can be said that there is a lot of 'dry goods'."

For the incremental funds issue that is generally concerned by the market, the plan clarifies the hard indicators for medium- and long-term funds to enter the market:

For public funds, it is clear that the market value of public funds holding A-shares will increase by at least 10% each year in the next three years. For commercial insurance funds, we strive to invest in A-shares by 30% of the annual premiums from 2025, and continue to increase the proportion and scale. This also means that at least tens of billions of new long-term funds will be added to A-shares every year.

Many industry insiders said that in addition to increasing the scale and proportion of various medium- and long-term funds investing in A-shares, it is more important that the plan clearly stipulates that the long-term funds have been fully established for more than three years. This is a very important institutional breakthrough, and it can be said that it has solved the problems that have not been solved for many years.

Be patient with "funding money" and requires guidance from the "baton" of the fund assessment mechanism. For a long time, the problem of "long money and short investment" has been prominent, largely due to the deformation of the action caused by the short assessment cycle. After the long-term assessment is established, medium- and long-term funds can focus on a longer-term and achieve longer-term and stable returns through investment capabilities.

At the same time, the stability of medium- and long-term capital investment behavior will also effectively improve the inherent stability of the capital market, reduce market volatility, significantly optimize the investment ecology of the capital market, enhance its attractiveness to various types of funds, and strengthen the benign interaction between funds and the market.

From the operational perspective, the plans for different types of medium- and long-term funds such as commercial insurance funds, national social security funds, basic pension insurance funds, enterprise (vocational) annuity funds, and public funds have made targeted arrangements based on their funding attributes and characteristics to further lift the "constraints" of medium- and long-term funds entering the market and stimulate the enthusiasm of medium- and long-term funds to enter the market.

The head of relevant departments of the China Securities Regulatory Commission said that various medium- and long-term funds actively enter the market, which can bring stable incremental funds to the market in the short term; in the long term, it can improve the market investor structure, better play the professional role of institutional investors, and guide all types of investors to form the concept of rational investment, long-term investment, and value investment.

Good investment returns and capital market ecology are the basis for attracting various medium- and long-term funds to enter the market. The implementation plan makes arrangements for guiding listed companies to increase their stock repurchase efforts, implementing dividend policies for multiple year rounds, and promoting listed companies to increase their use of repurchase and increase their holdings, so as to enhance their attractiveness to medium- and long-term funds through the high-quality development of the capital market itself.

Looking forward, with the entry of medium- and long-term stable funds into the market, the recovery and improvement of the capital market will be further consolidated, and various medium- and long-term funds will also better achieve value preservation and appreciation through the capital market.