Expert Perspectives | The new "National Nine Measures" are at the helm to promote the high-quality development of the capital market

On April 12, 2024, the State Council issued several opinions on strengthening supervision and risk prevention to promote high-quality development of the capital market (hereinafter referred to as the "Opinions"). The opinions issued this time consist of 9 parts and are the third "National Nine Articles" of the capital market. It is a guiding document for the capital market issued by the State Council again after the two "National Nine Articles" in 2004 and 2014.

The New Continuation of the "Five Great Articles" Policy

Central Financial Work Conference

The conference proposed for the first time to "accelerate the construction of a strong financial country" and pointed out the need to "do a good job in five major articles: technology finance, green finance, inclusive finance, pension finance, and digital finance", which pointed out the direction for promoting high-quality development of finance.

Government Work Report

This year's government work report proposes to vigorously develop technology finance, green finance, inclusive finance, pension finance, and digital finance. This is the first time since the Central Financial Work Conference that "five major articles" have been included in the government work report, becoming a hot topic of discussion in the National People's Congress and the Chinese People's Political Consultative Conference.

New "National Nine Articles"

The formulation of new policies clearly continues the spirit of the Central Financial Work Conference, continuing to focus on promoting the development of technology finance, green finance, inclusive finance, pension finance, and digital finance, further strengthening the strategic position of these fields.

With the release of the new "National Nine Measures", China's capital market development strategy has become more clear, with the goal of comprehensively improving market structure and function to better serve the high-quality development needs of the country. Recently, the Shanghai Composite Index has rebounded from a low of 2635 points to around 3000 points, indicating a gradual increase in investment enthusiasm in the market. However, after a long period of volatility in A-shares, the overall risk appetite of the market has declined. The new "National Nine Rules" in 2024 focuses on the center of Chinese path to modernization, and outlines the development blueprint from the aspects of investor protection, listed company quality, industry institution development, regulatory capacity and governance system construction, which is conducive to building a long-term healthy capital market, thus boosting the medium and long-term performance of the capital market.

Science and technology innovation enterprises usher in a window of listing

Science and technology innovation enterprises often have breakthrough technologies and products that can solve the so-called "bottleneck" problem, which is the key technological obstacles that restrict industry development. Through its innovative capabilities, it not only promotes its own development, but also assists in the transformation and upgrading of the entire industry and even the national economy. New quality productivity is a contemporary advanced productivity that has emerged from revolutionary technological breakthroughs, innovative allocation of production factors, and deep industrial transformation and upgrading. Science and technology innovation enterprises play a crucial role in solving key technological bottlenecks and promoting economic and industrial upgrading, and are the main force in developing new quality productivity.

Further improve the issuance and listing system

The new "National Ninth Article" clearly emphasizes the importance of technological innovation and high-quality development, and proposes to improve the issuance and listing system, raise listing standards, and strengthen the formulation of evaluation standards for the scientific and technological innovation attributes of the Science and Technology Innovation Board. This means that the market will be more inclined towards enterprises that are not only technologically advanced but also capable of continuous innovation. Helps to screen out enterprises with sustained research and development capabilities and innovation potential, thereby ensuring that high-quality enterprises are entering the market.

Strengthening the evaluation criteria for the scientific and technological attributes of the Science and Technology Innovation Board will encourage enterprises to continuously focus on the development of core competitiveness and key technologies, and promote independent innovation of core technologies. Not only can it enhance the market competitiveness of enterprises, but it can also promote the scientific and technological progress and industrial upgrading of the entire industry and even the national economy. Beneficial for capital to concentrate on enterprises that can bring practical innovation impetus to society and economy, incentivizing more enterprises to invest in technological innovation, thereby promoting the vigorous development of new quality productivity.

Increase support for equity and debt financing of related enterprises

The new "National Ninth Article" emphasizes increasing support for stock and bond financing for enterprises that comply with national industrial policy guidance and break through key core technologies. Innovation is a key driving force for development, and for enterprises that have made breakthroughs in key technologies such as artificial intelligence, biotechnology, high-end manufacturing, new energy, and quantum computing, it is a significant benefit.

Science and technology innovation enterprises, especially start-up high-tech companies, often face higher research and development costs and longer profit recovery cycles. By providing priority support for equity and debt financing for these enterprises, their financing difficulties and costs can be significantly reduced, enabling them to focus more on technological innovation and market expansion.

Through stock and bond financing support, more private and institutional investors can be attracted to pay attention to and invest in these science and technology innovation enterprises. When the new "National Ninth Article" clearly states that it will support such industries and technological fields, it will greatly enhance investor confidence, thereby bringing in capital inflows and accelerating the growth rate and scale expansion of these enterprises. Financing support can provide necessary impetus for the commercialization of these innovations, helping enterprises move from prototype development to comprehensive commercial production, thereby enhancing their market competitiveness and industry influence. Therefore, in the future, science and technology innovation enterprises will ride the wind and waves, usher in a golden period of listing, and the market prospects are bright.

Intensify delisting supervision efforts

For listed companies, the new "National Ninth Article" points out the need for strict and continuous supervision, strengthening information disclosure and corporate governance supervision, and building a capital market anti-counterfeiting and anti-counterfeiting system; Comprehensively improve the system of reduction rules and standardize the reduction behavior of major shareholders; Strengthen the supervision of cash dividends for listed companies and enhance investment value; Develop market value management guidelines for listed companies and crack down on illegal and irregular activities such as market manipulation and insider trading.

For the delisting process, the new "National Ninth Article" points out the need to deepen the reform of the delisting system and form a normalized delisting pattern. Further reduce the value of "shell" resources. Strengthen the supervision of mergers and acquisitions, enhance the relevance of the main business, strictly control the quality of injected assets, increase the supervision of "shell listing", and accurately crack down on various illegal "shell listing" behaviors.

The new "National Nine Articles" have increased regulatory efforts on the delisting system of the capital market, indicating a resolute and thorough regulatory attitude. This policy strengthens the quality assurance of the market, ensuring that only companies with sustainable business capabilities and development potential can stand firm in the market. Especially in terms of delisting policies, the new regulations clearly state the need to form a normalized delisting pattern where all withdrawals should be made, strictly regulate mergers and acquisitions, and especially for those who attempt to manipulate the market through "shell listing" or use the control of listed companies, which will greatly increase the difficulty and risk of their operations.

At the same time, the supervision of mergers and acquisitions is also strict. The new "National Nine Articles" point out strengthening the supervision of mergers and acquisitions, strengthening the relevance of main businesses, and strictly controlling the quality of injected assets, especially increasing the supervision of "shell listing", and accurately cracking down on various illegal "shell protection" behaviors. This indicates that in the current context of a large number of listed companies, the market places more emphasis on the quality and development of physical enterprises. Such policy adjustments help guide the capital market back to its essence, support the development of truly valuable enterprises, and further promote high-quality economic growth, serving the deep-seated needs of the real economy.

Optimize the policy environment for insurance fund equity investment

The new "National Nine Measures" emphasize the importance of continuously strengthening long-term investment power and propose a series of practical measures to promote the entry of medium and long-term funds into the market. By improving the basic system for adapting to long-term investment and constructing a policy system to support "long-term money and long-term investment", the aim is to optimize market structure and ensure that the capital market can provide a stable and predictable investment environment for long-term investors. This includes vigorously developing equity public funds and increasing the proportion of equity funds, which are expected to increase market depth and increase investor participation.

At the same time, the new "National Ninth Article" also emphasizes the importance of optimizing the policy environment for insurance fund equity investment. The role of insurance in coordinated socio-economic development. Finance is the core of modern economy and plays a crucial role in the national economy. By implementing performance evaluation methods for state-owned insurance companies and improving the regulatory system for insurance fund equity investment, policies will support insurance funds to play a more active role in the capital market and increase their investment proportion in the capital market. Improving the investment policies of the National Social Security Fund and the Basic Pension Insurance Fund, as well as encouraging banks to actively participate in wealth management and trust funds in the capital market, is of great significance for enhancing long-term funding supply and market stability.