China has introduced a range of measures aimed at stabilizing its stock markets, including plans to enhance pension fund investments in domestic listed companies. These steps come in response to the uncertainties posed by the return of Donald Trump as U.S. President.
The central authorities have issued guidelines to ensure market stability and facilitate the influx of medium to long-term capital, as detailed in a publication by the China Securities Regulatory Commission (CSRC) on Wednesday. The CSRC also aims to encourage large state-owned insurers to increase their investments in A-shares and urge listed firms to expand their share buybacks.
Kevin Net, who oversees Asian equities at la Financière de l’Echiquier, likens this strategy to Japan’s approach during Abenomics, aiming to shift more investments into domestic equities. However, while this could bear fruit in the long term, its immediate impact might be limited. The specifics of increasing dividends and share buybacks remain a key area of interest.
Meanwhile, CSRC’s Chairman Wu Qing, Deputy Finance Minister Liao Min, and central bank official Zou Lan are scheduled to hold a briefing on Thursday morning.
Chinese stocks began 2025 with their weakest opening in nearly a decade, following a challenging year impacted by real estate market issues and sluggish consumer confidence. Market experts expect China to deploy additional strategies to counteract the disruptions linked to Trump’s second presidency.
On his second day back in office, Trump expanded his tariff threats to encompass China, leading to a drop in Chinese stocks on Wednesday.
On Wednesday, the onshore CSI 300 Index recorded its first decrease in five sessions, while the Hang Seng China Enterprises Index emerged as Asia’s poorest performer. Although the new 10% tariffs are less severe than the 60% potential duties Trump mentioned during his campaign, investors remain on edge, anticipating increased market turbulence.
In a series of policy announcements made on Wednesday, the Chinese government outlined several initiatives aimed at bolstering the stock market.
Mutual fund houses are being encouraged to introduce more equity-focused investment products.
Additionally, institutions such as mutual funds, insurers, pension funds, and banks’ wealth management divisions will now be permitted to engage in share placements of listed companies as strategic investors.
To further support share repurchases and equity stake growth, authorities will direct listed companies to utilize the central bank’s relending facilities more effectively.
Finally, the government plans to extend the performance evaluation period for state-backed insurers and reduce the emphasis on annual return on assets.
