China Securities Regulatory Commission (CSRC) in Beijing Photo:VCG

Following the top leadership meeting on the current economic situation, China' s securities watchdog responded swiftly, vowing more reforms in a bid to revive the capital market and bolster investor confidence.

During a two-day conference that wrapped up on Tuesday, the China Securities Regulatory Commission (CSRC) said that it will deepen reforms and push forward the opening-up of the capital market, as it moves to implement the policy support promised during the leadership meeting.

In making arrangements for the economic work in the second half year, the meeting held by the Political Bureau of the Communist Party of China (CPC) Central Committee on Monday pledged efforts to "invigorate the capital market and boost investor confidence," according to the Xinhua News Agency.

Arrangements for the capital market have rarely been mentioned during the crucial meeting.

"It reflects that the central leadership has attached vital importance and ardent expectations for the capital market," the securities regulator said in its official website.

The CSRC said that it will implement measures related to investment, financing and trading to further stimulate the vitality of the capital market.

"Promoting reforms on the investment side will help break through the bottleneck of long-term capital entering the market. Introducing long-term capital in a vigorous way could... add fuel to the prosperity of the Chinese stock market," Li Daxiao, chief economist at Shenzhen-based Yingda Securities, told the Global Times.

In terms of financing, the regulator said it will keep the normalization of IPOs and refinancing reasonable, and coordinate the dynamic balance of the primary and secondary markets.

"That points to the core problem of the domestic stock market. A scientific and reasonable arrangement is important for the balance between the primary and secondary markets, which will help stabilize market expectations," Li said.

In addition, the CSRC reiterated the issue of the protection of the interests of the nation's large group of ordinary investors.

The number of stock accounts in China's A-share market exceeded 200 million for the first time in 2022.

The CSRC is focused on implementing a three-year plan to improve the quality of listed companies, with falsified accounting to lead to severe penalties, Yi Huiman, chairman of the CSRC, said at the Lujiazui Forum in Shanghai in June.

"The securities regulator has previously found problems in the stock market. With follow-up measures in place, it is believed that the capital market will be revived in a genuine sense," Li said.

Yang Delong, chief economist at Shenzhen-based First Seafront Fund Management Co, told the Global Times on Wednesday that the signal from the mid-year conference of the CSRC is "undoubtedly a catalyst to shore up the A-share market," which has been sluggish since the start of the year.

"The performance of the market lagged behind that of the overall economy in the first half," Yang said.

The benchmark Shanghai Composite Index rose 3.65 percent in the first half, while the NASDAQ-style ChiNext board tumbled 5.61 percent.

The National Bureau of Statistics said earlier this month that China's second-quarter GDP grew by 6.3 percent from a year earlier, which lifted the first-half growth rate by 1 percentage point to 5.5 percent. GDP expanded by 4.5 percent in the first quarter, after the country declared a decisive victory against COVID-19 and embarked on a recovery.

"With more policy stimulus expected in the pipeline in the second half of the year, China's economic recovery will gain momentum, and the stock market will also gain," Yang noted.

From a global perspective, China's high-quality assets are relatively undervalued compared with those in the US and Europe, while the fundamentals of China's economy are relatively superior globally. The huge contrast will eventually be corrected, he said.

UBS Securities forecast that the A-share market will rise 10 percent in the second half.

"The Chinese economy is facing new difficulties and challenges… After a steady shift for the better in epidemic prevention and control, China's economic recovery has been progressing with twists and turns. The economy has tremendous resilience and potential for development, and its long-term sound fundamentals remain unchanged," the top leadership meeting said on Monday.

The meeting called for measures to actively expand domestic demand, give play to the basic role of consumption in driving economic growth and introduce policies to promote private investment.

"Having realized the problems facing the domestic economy, it is now more important to follow through on pledges by implementing them in a detailed way," Li stressed.

On Wednesday, the National Development and Reform Commission (NDRC), China's top economic planner, held meetings with representatives from the private sector, listening to their difficulties and seeking policy advice.

The NDRC issued a notice on Monday saying it would further build up relevant mechanisms and improve the policy environment to spur the development of private investment.