China’s securities regulator has given approval for the launch of 37 retail funds, signaling the government’s efforts to revive the struggling stock market amidst an ailing economy. This move supplements a series of measures aimed at strengthening the market, including a reduction in stamp duty, a slower pace of initial public offerings (IPOs), and lower margin financing requirements.
The approved funds include 10 exchange-traded funds (ETFs) that track the small-cap CSI 2000 Index, as well as seven tech-focused ETFs, according to the China Securities Regulatory Commission (CSRC) website. Additionally, there are 20 innovative mutual funds that will charge investors floating fees, which will be determined based on factors such as fund size, performance, or holding period. These funds are expected to attract fresh capital into the market.
To further support the market, the CSRC has committed to expediting the approval process for ETFs and encouraging asset managers to lower management and trading fees. These market-friendly measures aim to stimulate investor interest and activity.
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China’s bluechip CSI300 Index experienced a surge of over 5% at the opening on Monday, although it remains down approximately 6% from its peak in April. In response, China’s leaders have pledged to enhance investor confidence and revitalize the stock market, which is currently the world’s second-largest. This renewed focus comes as the post-pandemic recovery slows and a debt crisis in the property market deepens.
An editorial in the official China Securities Journal emphasized the importance of recent support measures, stating that the proper functioning of the capital market is crucial for China’s economic recovery. The editorial highlights the significance of a dynamic capital market in stabilizing people’s expectations and increasing confidence. It also underscores the determination of policymakers to breathe new life into the market and boost overall confidence.
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A Chinese national flag flutters outside the China Securities Regulatory Commission (CSRC) building on the Financial Street in Beijing, China, on July 9, 2021. (REUTERS/Tingshu Wang/File Photo)
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