Enhancing the Intrinsic Stability of Capital Markets

In the recent government work report, a clear direction has been defined for the reform and development of capital markets in the nation, with a particular focus on enhancing the "internal stability" of these marketsThis concept of internal stability serves as a guiding principle for future reforms, significantly boosting market confidence and signaling an earnest commitment to cultivating a more robust financial ecosystem.

The newly framed regulatory philosophy, encapsulated in the phrase "Two Strengths, Two Rigor," emphasizes the critical role of investors as the foundation of the market and publicly listed companies as its keystonesBoth investors and corporations are deemed essential for unleashing the potential of capital markets, which are viewed as the lifeblood for economic progress.

Implementing stricter regulatory oversight is crucial for reinforcing this foundation, enhancing the market's innate stability, and driving high-quality development in capital markets

The essence of “Two Strengths, Two Rigor” is expected to become a fundamental strategy in propelling the health and vitality of capital markets.

This strategy can be appreciated through three primary lensesFirstly, prioritizing investors is a reflection of the inherent political and societal orientation of the capital marketIt is vital for restoring investor confidence and stimulating active market participationWith approximately 220 million investors currently in the Chinese stock market—predominantly retail investors—the stability and growth of capital markets hinge on aligning with their interestsEnsuring the protection of investors' legal rights and enhancing their financial satisfaction are essential for establishing a more stable and healthy capital market.

The newly articulated requirements for the capital market highlight the paramount importance of investors in the landscape of capital markets

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China has ascended to become the world's second-largest wealth management market, making capital markets a pivotal avenue for citizens to increase their property incomes and meet the escalating demand for wealth management solutionsTherefore, it is imperative to foster better investor relations, improve services, and strengthen legal, regulatory, and judicial protections to genuinely stabilize market sentiment.

A capital market grounded in internal stability sees investor confidence as the linchpin for overall market steadinessFostering consensus among all market participants to uphold the investors-first ideology is crucial for catalyzing the smooth and healthy progression of capital markets.

Furthermore, the viability of listed companies stands as a significant pillar for the long-term health of capital marketsTheir ability to return value to investors and efficiently perform their role as central hubs in capital allocation is essential

Enhancing the quality of listed companies should be a focal point of reform and development effortsCompanies listed on the stock market are not only bedrocks of long-term growth but are also reservoirs of investment value and crucial to the nation's economic stability.

As highlighted by financial expert Wu Qing, the focus must be on elevating the quality of listed companies, allowing them to maximize their functional roles and subsequently increase investment valueAchieving this entails developing internal mechanisms to enhance long-term investment valueMoreover, applying an effective toolkit that includes share buybacks, government shareholding increases, regular dividends, and mergers and acquisitions will ensure that more investors can benefit from the growth of these companies, collectively enhancing market confidence.

Adhering to a stringent regulatory framework is pivotal as well, as it fosters a nurturing ecologically market's foundational stability

The vision is to cultivate a capital market that is safe, regulated, transparent, open, dynamic, and resilientAchieving these ambitions requires continued efforts to raise the quality of listed companies and adhere to an investor-first philosophy, along with the creation of a clean and ethical market atmosphere.

The national financial conference has explicitly underscored the need for "comprehensive reinforcement of institutional, behavioral, and functional supervision, persistent oversight, and actions to eliminate regulatory gaps." A zero-tolerance approach to illegal financial activities must be firmly established to secure investor interests and sustain market integrity.

Wu Qing further affirmed the commitment to benchmark against established standards, systematically reviewing and expediting the closure of existing regulatory gaps across various markets, including stocks, bonds, futures, and derivative markets.

In recent months, regulatory bodies have intensified their oversight across the entire operational spectrum, escalating efforts against financial crimes such as fraudulent financial reporting and market manipulation