Stock market Illustration: VCG

Chinese regulators on Thursday unveiled a guidance aimed at encouraging medium- and long-term funds to enter the capital market, in a move which experts said will foster the healthy development of China's capital market and bolster investor confidence. 

The release of the guidance came after a Communist Party of China (CPC) leadership meeting on Thursday that stressed the need to boost the country’s capital market, the Xinhua News Agency reported.

The guidance, jointly issued by  the office of the Central Financial Work Commission and the China Securities Regulatory Commission (CSRC), aims to significantly increase the scale and proportion of medium- to long-term capital investment over time, strengthen the stability and investment returns in the capital market, and promote the concept of medium- and long-term investment, according to a document published on the website of the CSRC on Thursday.

The guidance stressed the need to implement multiple measures to improve the quality of listed companies while severely cracking down on various illegal activities.

Efforts should also be made to develop public equity funds and support the steady development of private equity investment funds, including the implementation of a fast-track approval process for exchange traded funds (ETFs).

It also emphasized the need to establish a long-term assessment mechanism for commercial insurance funds and various pension funds with a cycle of three years or more, cultivate and strengthen patient capital such as insurance funds, and remove the institutional obstacles affecting long-term investment.

"These policy measures clearly indicate intensified support for the financial market. This not only provides a clear direction for the long-term healthy development of the capital market but also enhances investor confidence and supports the long-term returns,” Yang Delong, chief economist at Shenzhen-based First Seafront Fund, told the Global Times on Thursday.

"With these supportive policies in place, we anticipate a more robust capital market that aligns with the broader economic recovery,” Yang said.

In addition to attracting long-term capital, the CSRC will also release six measures to promote mergers and acquisitions, and work with various parties to facilitate the circulation of private equity and venture capital funds in the process of fundraising, investment, management and withdrawal, Wu Qing, head of the CSRC, told a press conference on Tuesday.

More efforts will also be made to protect the legitimate rights and interests of small and medium-sized investors, and firm actions will be taken to crack down on illegal activities such as financial fraud and market manipulation, according to Wu.

The Shanghai Composite Index surged by more than 100 points, closing above 3,000 points on Thursday, the first time it rose above the key benchmark since July 2.