China’s top market regulator strikes positive tone as investors brace for turbulence

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CSRC boss Wu Qing urges securities firms and asset managers to enhance their capabilities and strengthen risk controls

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A man waits to cross a road in the central business district of Beijing on November 10, 2024. Photo: AFP

Cao Li

Published: 12:59pm, 11 Nov 2024

China’s top market regulator said that he had held two discussions with securities firms and asset managers to urge them to better serve the demand for investment and financing.

Wu Qing, the chairman of the China Securities Regulatory Commission, urged the firms to enhance their capabilities in professional services including investment banking and research, while strengthening risk controls for new products.

The statement signals a positive tone after China’s top legislative body approved a 6 trillion yuan (US$835 billion) package to help local governments swap their hidden debt, which has accumulated through years of unchecked infrastructure development and spending on measures to manage the Covid-19 pandemic.

The Chinese capital market is showing signs of recovery and resilience, said the CSRC statement, released on Sunday. “With the further strengthening of countercyclical adjustments in fiscal and monetary policies, the macro economy is expected to continue to improve, providing a solid foundation and conditions for maintaining the stable and healthy development of the capital market,” it said.

Beijing estimates that the amount of hidden debt stands at around 14 trillion yuan, but some banks estimate it is between 50 trillion and 60 trillion yuan.

Analysts and economists expected the 6 trillion yuan package to disappoint the market. The Hang Seng Index fell more than 2 per cent on Monday morning.