Stock market. Photo:VCG

China’s top securities regulator announced on Tuesday that it will implement measures designed to promote medium- and long-term funds into the market, as well as facilitate mergers and acquisitions (M&A) and restructuring of the listed companies. 

The moves are part of a broader effort to ensure the stable operation of China's capital market, which will bolster the broader economy.

Wu Qing, chairman of the China Securities Regulatory Commission (CSRC), emphasized at a press conference that injection of medium- and long-term funds is crucial for navigating short-term market fluctuations, which will serve as a "stabilizer" and "ballast" for the capital market.

The CSRC, along with the central bank and other financial regulators, plans to outline a set of new measures to encourage medium- and long-term capital to enter the market. This includes further support for Central Huijin Co. in raising its holdings and expanding its investment scope in the market, Wu said.

Wu said that the CSRC has recently worked out six measures to promote business mergers and acquisitions, actively supporting public companies in their transformation and upgrading to meet the requirement of developing new quality productive forces. 

The CSRC will also support mergers and acquisitions particularly in strategic industries, to enhance the supply chains and core technology innovation, Wu noted.

Also on Tuesday, the central bank announced new policy tools to ramp up the stock market. The first measure involves creating a swap facility that allows eligible securities, mutual funds, and insurance companies to obtain liquidity from the central bank through asset pledges, enhancing their funding capabilities and their ability to increase stock holdings. 

The second measure will establish a special relending facility for stock buybacks, encouraging banks to provide loans to listed companies and major shareholders for stock repurchases.

Wu noted that China’s capital market ecosystem is improving since the State Council released sweeping guidelines in April, aimed at strengthening market regulation, addressing risks, and promoting the high-quality development of the capital market.

As of the end of August, the CSRC had handled 577 securities and futures market violation cases. And, the listed companies have distributed cash dividends totaling 2.2 trillion yuan ($312.8 billion) for the 2023 fiscal year, setting a new historical record. New stock issuances and refinancing are kept at a suitable pace, Wu said.

China’s A-share market soared on Tuesday, as investors rushed to snap up stocks following the measures announced by the financial regulators on Tuesday morning. The Shanghai Composite Stock Index surged by 4.15 percent, surpassing the 2,800-point mark, marking its largest single-day increase in over four years. The Shenzhen Component Stock Index rose by 4.36 percent, while the ChiNext Index grew by 5.54 percent.