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Published Jan 22, 2025 • 1 minute read
BANGKOK (AP) — The Chinese government plans to ensure that share prices will rise by ordering pensions and mutual funds to invest more in domestic stocks, to help jolt the markets out of the doldrums.
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Officials told reporters in Beijing on Thursday that mutual funds should increase holdings of onshore stocks, called A-shares, by at least 10% a year over the next three years.
Commercial insurance funds will have to put 30% of their annual new premium revenue into share markets beginning this year, they said.
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“This means that at least several hundred billion yuan of long-term funds will be added to A-shares every year,” said Wu Qing, chairman of the China Securities Regulatory Commission.
“Implementing the plan’s various measures will further enhance the equity allocation capacity of medium- and long-term funds, steadily expand the scale of investment, improve the supply and structure of funds in the capital market, and consolidate good conditions for the capital market’s recovery,” Wu said.
Markets in Hong Kong and Shanghai rose early Thursday after the announcement, with the Shanghai Composite index gaining 1.4%.
China’s share markets are huge but they hit their peak value before the Asian financial crisis and have meandered well below that level since. A lack of gains in share prices, along with falling housing prices, has discouraged Chinese families from spending, slowing consumer demand and economic growth.
Sell-offs by major shareholders and high market volatility have handicapped the Chinese markets, Lei Meng, a China equity strategist at UBS Securities, said in a commentary Thursday.
So, “the willingness of long-term investors to participate in the stock market has dwindled,” Lei said. “The proposal of market value management reform directly addresses this issue because it is directly related to investors’ sense of gain.”
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