The capital market is on the news broadcast again! How to interpret the blockbuster signal released by the National Standing Committee?

Every reporter: Wang Yandan Every editor: Zhao Yun

On January 22, A-shares fell on the hot search again, the three major indexes all fell sharply, and the Shanghai Composite Index fell below the 2,800-point mark again.

That night, CCTV's "News Network" broadcast heavy news. When referring to the capital market, the National Standing Committee clearly pointed out that "more effective measures should be taken to stabilize the market and stabilize confidence".

On July 24, 2023, the meeting of the Political Bureau of the Central Committee proposed to "activate the capital market and boost investor confidence". After half a year, the National Standing Committee continues to emphasize the important role of the capital market, how to interpret it?

In half a year, a number of blockbuster policies have been introduced

According to CCTV News, on the 22nd, Li Qiang presided over an executive meeting of the State Council to listen to the report on the operation of the capital market and work considerations.

The National Standing Committee stressed that it is necessary to further improve the basic system of the capital market, pay more attention to the dynamic balance of investment and financing, vigorously improve the quality and investment value of listed companies, increase the intensity of medium and long-term capital entry into the market, and enhance the internal stability of the market. It is necessary to strengthen the supervision of the capital market, "zero tolerance" for violations of laws and regulations, and create a standardized and transparent market environment. It is necessary to take more effective measures to stabilize the market and confidence. It is necessary to enhance the consistency of macroeconomic policy orientation, strengthen the innovation and coordination of policy tools, consolidate and enhance the positive trend of economic recovery, and promote the steady and healthy development of the capital market.

Among them, the most concerned by the market is specifically mentioned that "more powerful and effective measures should be taken to stabilize the market and stabilize confidence".

In fact, since the meeting of the Political Bureau of the Central Committee of the Communist Party of China on July 24, 2023, clearly stated that "it is necessary to activate the capital market and boost investor confidence", a package of favorable products has been introduced to boost A-shares:

First, on the evening of August 10, 2023, the Shanghai and Shenzhen stock exchanges announced that they would accelerate the launch of a series of pragmatic measures to improve the trading system and optimize trading supervision.

On the one hand, the study allows the number of securities such as stocks and funds on the main board to be declared in increments of 1 share (share), and on the other hand, it is necessary to study the introduction of an after-hours fixed-price trading system for ETFs (exchange-traded open-end funds).

Second, on August 18, 2023, in order to further invigorate the capital market and boost investor confidence, the China Securities Regulatory Commission (CSRC) instructed the Shanghai Stock Exchange, Shenzhen Stock Exchange, and Beijing Stock Exchange to further reduce securities transaction handling fees from August 28.

Third, on August 22, 2023, the Ministry of Finance, the State Administration of Taxation and other departments issued a number of preferential tax policies to support the development of the capital market, and the relevant policies will be implemented until the end of 2025 or 2027.

Fourth, on August 27, the Ministry of Finance and the State Administration of Taxation issued an announcement that the stamp duty on securities transactions will be halved.

Fifth, on August 27, 2023, the China Securities Regulatory Commission (CSRC) issued a document stating that it will coordinate the balance of the primary and secondary markets, improve the counter-cyclical adjustment mechanism of the primary and secondary markets, and optimize the regulatory arrangements for IPOs and refinancing.

Sixth, on September 1, 2023, the China Securities Regulatory Commission (CSRC) issued the Notice on Matters Concerning the Reporting of Programmatic Transactions on Stocks and the Notice on Matters Concerning the Strengthening of the Management of Programmatic Transactions.

Seventh, on September 1, 2023, the China Securities Regulatory Commission formulated and issued the "Opinions on the High-quality Construction of the Beijing Stock Exchange" to further promote the stable development, reform and innovation of the Beijing Stock Exchange (hereinafter referred to as the Beijing Stock Exchange), and accelerate the creation of a "main front" system for innovative small and medium-sized enterprises.

Eighth, on September 26, 2023, the Shanghai and Shenzhen Stock Exchanges issued a notice on matters related to further regulating the reduction of shareholdings, and the Beijing Stock Exchange also issued and implemented revised guidelines for reducing shareholdings, which is known as the "strictest new regulation on shareholding reduction in history".

Ninth, in October 2023, the China Securities Regulatory Commission (CSRC) issued a notice to cancel the lending of securities by senior executives and core employees of listed companies through special asset management plans established by participating in strategic placements, and appropriately restrict the lending methods and proportions of other strategic investors in the early stage of listing. At the same time, the Shanghai and Shenzhen North Stock Exchanges issued the Notice on Optimizing the Relevant Arrangements for Securities Lending and Securities Lending Transactions

Ninth, on December 15, 2023, in order to further improve the normalized dividend mechanism of listed companies and improve the level of investor returns, the China Securities Regulatory Commission issued the "Regulatory Guidelines for Listed Companies No. 3 - Cash Dividends of Listed Companies", which further clearly encourages the orientation of cash dividends and promotes the improvement of dividend levels.

In addition, the securities and fund industries have also responded closely to the new regulations.

For example, in the securities industry, the securities industry has recently generally responded to penetrating supervision and strictly regulated the two financial institutions, and a number of securities firms have issued new regulations prohibiting the financing of securities purchases for repayment of securities lending.

Since last year, more than 130 public fund managers in the industry have issued fee reduction announcements, with more than 3,300 fee reduction products.

The positive signal released by the current National Standing Committee meeting will enhance market confidence

So why is the market still significantly weaker recently?

The chief strategy analyst of a brokerage firm told the "Daily Economic News" reporter that from the perspective of funds, the trading sentiment before the Spring Festival was relatively light, and the negative news such as snowball knocking in caused emotional panic, resulting in a short-term weakening of the market;

A public fund manager also pointed out that the decline on the 22nd was not a fundamental problem, but a concentrated stop loss after a rapid decline. In addition, the recent news of the snowball concentrated knocking in has also triggered further market volatility.

After the news broadcast on the 22nd about the National Standing Committee's attention to the capital market, most market participants believe that the news is conducive to rebuilding market confidence and is of great significance to the future development of the capital market.

Wang Han, chief economist of Industrial Securities, pointed out to reporters that this meeting released at least three positive signals to the market:

First, in view of the fact that the mainland economy is in a transition period and there may be a shortage of endogenous long-term funds, the meeting emphasized the importance of long-term funds entering the market;

Second, in the period of economic transition, the financing demand is larger, in recent years, the local government and the central government in the primary market to the industrial fund investment efforts are larger, the meeting mentioned the dynamic balance of investment and financing, the quality of listed companies and the value of investment, further highlighting the policy orientation;

Third, in the past, more attention was paid to the financing function of the capital market, in fact, the financing demand of the primary market and the secondary market needs to achieve a dynamic balance, especially for investors, if the market investment function can be improved, it will be conducive to the better implementation of the price discovery mechanism, which was also mentioned at this meeting.

Wang Han believes that at the beginning of the year when the market is volatile, the National Standing Committee will focus on the capital market, remove the false and keep the true, which undoubtedly responds to some important concerns, reflecting the importance of the capital market as a hub emphasized by the previous financial work conference, and the confidence in market stabilization will be further consolidated.

Zhang Jun, chief economist of Galaxy Securities, believes that the National Standing Committee meeting is the first time that the new government has listened to a report on the operation of the capital market and made clear arrangements, which fully reflects the great significance of maintaining the stability of the capital market for the overall stability of the economy and society. In the current market situation, this meeting will enhance market confidence.

An overshoot rally can happen at any time

Investors are more concerned about when the market will rebound?

The above-mentioned chief strategic analyst clearly pointed out to reporters that the panic market is currently clearing, and the market may overshoot and rebound at any time. It is recommended that investors pay attention to varieties with high elasticity, such as animation games, optical communications and other sectors.

The above-mentioned public fund manager said that from the perspective of historical comparison, the current market environment is similar to the end of 2018 - the A-share market fell in 2018, and the issue of equity pledge of listed companies began to attract high-level attention from October. In 2019, the Shanghai Composite Index rose by nearly 20%, the Wind All A Index rose by nearly 30%, and the Shanghai Composite 50 Index and ChiNext Index rose by about 40%.

Chen Guo, chief strategy officer of China Securities Construction Investment, said that the panic caused by the negative positive cycle of funds has led to an overshoot in the market, from the history of A-shares, because the rapid adjustment caused by funds and sentiment is often the last fall in the market, it is worth noting that some high-frequency economic data in the fundamentals have recently picked up: "Once the catalyst is favorable, the market will rebound at any time, and the short-term focus on the performance forecast guidance and the direction of the marginal catalysis of the economy." Focus on: electronics, military industry, electric power, power equipment, communications, coal, building materials, etc. ”

Fu Jingtao, a strategic analyst at Shenwan Hongyuan, pointed out that avoiding pessimistic expectations and self-reinforcing capital outflows is the bottom line for activating the capital market. The short-term market is undoubtedly in the historically cost-effective zone.

He pointed out that the market is worried that the upward demand will be inelastic in 2024, and the pressure on supply release will remain high. But such fundamental concerns have been amply reflected in the short-term correction. The long-term price-performance ratio of the market has been on par with the historical lows. The short-term over-falling signal is clear, and the market has an intrinsic demand for repair. The National Standing Committee once again mentioned the capital market, reflecting the management's attention to the capital market, covering systemic risks, stabilizing market expectations, and opening the window for policy strength. At the same time, it is an excellent time for long-term allocation at the time when the long-term and short-term cost performance is high, and it is the right time to actively guide long-term funds to enter the market.

At the same time, he pointed out that emphasizing corporate governance and shareholder returns is becoming a trend of thought. Especially in the direction of the new economy, investors at this stage pay special attention to the balance between financing and shareholder returns, which is reflected in the short-term decline in risk appetite in the new economy industry and the decline in valuation centers. The flip side of the financing function is the optimization of the investment function. Under the guidance of "China Special Valuation", high-quality enterprises in mature industries are providing more and more generous shareholder returns. However, new economy companies also need excellent corporate governance to support the market's expectation of long-term performance and improved shareholder returns. In the future, a number of new core assets will be expected to enter the field of vision of investors, driving the main line of the market to be clear and the valuation repaired. Therefore, the short-term policy bottom line has been proven + the cost performance has been clearly improved, and the over-falling rebound may occur at any time. February will be a key window for the spring market.

National Business Daily