China to boost long-term funds for equity markets

China has introduced several measures to stabilize its stock markets, including allowing pension funds to increase investments in domestic equities.

Chinese state carried the report ICYMI.

In summary:

A directive from the central government, released by the China Securities Regulatory Commission (CSRC), emphasizes efforts to bolster market confidence. Key officials, including CSRC Chairman Wu Qing, Deputy Finance Minister Liao Min, and central bank representative Zou Lan, are scheduled to provide further details in a briefing

• 9:00 am Beijing time on Thursday (0100 GMT Thursday, and 2000 US Eastern time on Wednesday)

Among the strategies, authorities will encourage major state-owned insurers to raise their investments in A-shares and push listed companies to conduct more share buybacks. Market analysts compare this move to Japan’s pension fund-driven equity strategy under Abenomics, though they remain uncertain about its short-term impact.

The measures come as Chinese stocks experience their worst start to a year in nearly a decade, following a turbulent 2024 marked by property market struggles and weak consumer sentiment. Analysts expect further government interventions to counteract the market volatility, exacerbated by Trump’s renewed tariff threats, which have already led to declines in key Chinese stock indices.

Additional policy measures announced include:

• Encouraging mutual fund firms to launch more equity-focused products
• Allowing institutional investors, including mutual funds, insurers, pension funds, and bank wealth management units, to participate in listed firms’ share placements
• Directing companies to utilize central bank funding tools for share repurchases and stake increases
• Extending the evaluation period for state-backed insurers while reducing the emphasis on short-term asset returns

While these initiatives signal long-term support for China’s stock markets, investors remain cautious about their immediate effectiveness.

Green shoots? Or just fertilizer?

This article was written by Eamonn Sheridan at www.forexlive.com.