China is encouraging long-term investors as well as major shareholders of listed firms – to buy more equities and increase their holdings respectively when equities slump, in an attempt to stabilize stock market.
China’s securities watchdog in a statement said government will also facilitate corporate financing in COVID-hit areas and urged state shareholders of listed firms to actively buy undervalued stocks.
Benchmark index CSI300 fell as much as 3.1% earlier on Monday, underscoring the biggest drop in a month.
The China Securities Regulatory Commission (CSRC) said in the statement that authorities will take steps to stabilize expectations of listed companies and investors.
China will encourage social security funds, pension funds, insurers, trust firms and wealth management firms to allocate more money to equity assets, and invest more in quality listed companies, the CSRC added.
The government will also improve the financing mechanism for private companies, and support corporate fundraising, acquisitions and restructurings in areas badly hit by COVID.
To boost investor confidence, CSRC said it will encourage listed firms to buy back their shares to stabilize prices. Major shareholders and senior executives are also encouraged to actively buy shares when prices fall sharply.
Meanwhile, state shareholders should actively buy undervalued stocks, and support share buy-back and cash dividend plans by listed firms, according to the statement, which was jointly published by the CSRC, China’s state assets supervisor, and the All-China Federation of Industry and Commerce.
