SCIO briefing on financial policy package to stabilize the market and expectations

Shou Xiaoli:

Thank you, Mr. Li, for your introduction. Now, I will give the floor to Mr. Wu.

Wu Qing:

Ladies and gentlemen, members of the media, good morning! First, thank you all for your long-term attention to and support of the capital market and the work of the CSRC. Since the beginning of this year, the CSRC has thoroughly implemented a series of decisions and deployments by the CPC Central Committee and the State Council, continuously advancing the implementation and effectiveness of the latest Nine-Point Guideline and related policies on the sound development of the capital market. As a result, the market has generally remained stable while making steady progress and showing positive momentum. Since early April, the U.S. government's tariff policy has severely impacted the international economic and trade order, causing volatility in global financial markets and putting considerable pressure on China's capital market. To meet this sudden and severe challenge, we, guided by the strong leadership of the CPC Central Committee and the State Council and following the coordination from the Office of the Central Financial Commission, cooperated with relevant departments, took swift action and implemented a comprehensive package of market-stabilizing measures, including policy support, capital interventions, and efforts to guide market expectations. The PBC, the NFRA, the State-owned Assets Supervision and Administration Commission of the State Council, and the State Administration of Foreign Exchange all sent strong policy signals. Central Huijin Investment took decisive actions. The National Council for Social Security Fund, along with securities and fund management institutions, banks, insurers and various investors, showed confidence and made positive efforts. Many listed companies helped stabilize stock prices through measures such as share buybacks and increasing their own holdings. As the saying goes, "When everyone adds wood to the fire, flame runs high; when we face challenges together, we can weather any storm." Thanks to the collective efforts of investors and other market participants, the A-share market continuously rebounded following a day of significant volatility. The market then stabilized and showed positive signs, demonstrating strong resilience and the ability to withstand risks.

The April 25 meeting of the Political Bureau of the CPC Central Committee emphasized the need to continuously stabilize and invigorate the capital market, fully reflecting the CPC Central Committee's high regard for stabilizing market performance and expectations as well as its high hopes for future development. We will make every effort to implement this directive, and continue to carry out the measures set forth in the four documents issued by the CSRC in March 2024 concerning the regulation of listed companies, securities firms and public offering funds, the establishment of first-rate investment banks and institutions, the improvements to the CSRC system, among other things, to ensure the sound development of the capital market. We are committed to fulfilling our responsibilities by stabilizing the market, boosting market vitality and enhancing market functions.

First, we will make every effort to strengthen and sustain the momentum of market stabilization and improvement. We will strengthen market monitoring and conduct comprehensive risk assessments, adjusting contingency plans as needed to respond to various external risks and impacts. We will fully support Central Huijin Investment in playing its role as a quasi-stabilization fund, with its effective operations in the market being backed by policies issued by the PBC. This approach is among the most robust in the world. We will work with the PBC to improve the long-term mechanism of monetary policy tools that support the capital market and further enhance the stabilizing role of all market participants.

Second, we will emphasize the important focus of serving the development of new quality productive forces. We're focusing on several key initiatives: We'll soon introduce policies and measures to deepen reforms of the Science and Technology Innovation Board (STAR Market) and ChiNext board, which we'll announce at an appropriate time. These reforms will enhance the inclusiveness and adaptability of our systems in terms of market tiers, review mechanisms and investor protections. We're also working to apply best practices from exemplary cases as quickly as possible. We'll soon release the newly revised Administration Measures for Significant Asset Restructuring of Listed Companies, along with related regulatory guidelines. These updates will enhance the capital market's role as the primary channel for mergers, acquisitions and corporate restructuring. We're actively developing sci-tech innovation bonds, optimizing the issuance and registration process, and enhancing credit support mechanisms. This will provide sci-tech enterprises with comprehensive financial services throughout their development journey.

Third, we're working to attract more medium- and long-term funds into the capital market. We'll guide listed companies to improve governance, enhance performance, and continuously increase investor returns. At the same time, we're intensifying efforts to attract long-term funds and working with all parties to expand both the volume and proportion of diverse medium- and long-term funds in the market. Today, we're releasing the Action Plan for Promoting the High-Quality Development of Public Funds. This plan better aligns the interests of managers and investors, creating shared success and mutual benefits. We're aiming to create a virtuous cycle where better investment returns attract more capital, which then leads to greater market stability.

The stability of the stock market affects the broader economic and social environment, as well as the immediate interests of hundreds of millions of investors. At present, China's economy continues to recover and gain momentum. All relevant authorities have made thorough preparations to respond to external shocks. This not only adds greater certainty to a global economy fraught with uncertainty, but also creates a solid foundation and favorable conditions for the stable operation of China's capital market. Our confidence in the capital market stems from four aspects: First, the strong leadership of the CPC Central Committee and the State Council, and their firm determination and effective arrangements to maintain market stability. As everyone can see, these are concrete actions producing tangible results. Second, the implementation of the "1+N" policy framework in the capital market has driven positive and profound changes in the market's internal structure, and a balanced investment and financing ecosystem is taking shape at an accelerated pace. Third, the technology sector in the A-share market is developing a clearer narrative and stronger clustering effect. As high-quality economic development continues, the potential of new quality productive forces will become increasingly apparent. The deep integration of technological and industrial innovation will inject valuable new vitality into the capital market. Fourth, by industry standards, the A-share market's valuation remains at a relatively low level. The price-to-earnings ratio of the CSI 300Index is only 12.3. Major Chinese market indices trade at significantly lower multiples than global benchmarks like the S&P 500. In light of significantly increasing instability in the global market, Chinese assets continue to increase in allocation value and attractiveness. Simply put, we have reliable economic growth, sound macroeconomic policies and strong institutional guarantees. These factors inject greater certainty into our economy and capital market amid an uncertain global environment.

In short, encountering wind and rain on the way forward is normal. Whether we face gentle breezes or violent storms, choppy waters or massive waves, we have all the necessary conditions, confidence and capabilities needed to ensure China's stock market develops in a stable and healthy manner. Thank you.

Shou Xiaoli:

Thank you, Mr. Wu. The floor is now open for questions. Please identify your media organization before asking your question.