Editor’s note: Recently, the covid-19 pneumonia epidemic outside China, International Geopolitics, commodity markets and other variables have increased sharply, bringing new major challenges to China’s economic growth and global economic recovery. The “March 16” meeting of the Finance Committee of the State Council and the “March 21” meeting of the national Standing Committee clearly put forward that targeted measures should be taken to stabilize expectations and stabilize the development of the capital market. Confidence is more valuable than gold. Since March 27, the Securities Times Securities Company China has launched a series of reports on “boosting market confidence and stabilizing the capital market”. Through extensive interviews with institutional figures in the securities industry, fund industry, venture capital industry, experts and scholars, as well as representatives of listed companies and enterprises, we will listen to the voice of the market, gather the wisdom of all parties, gather more consensus and jointly contribute to the stability of the capital market!
“China concept stocks and Hong Kong stocks have actually oversold.” Recently, Zhongtai Securities Co.Ltd(600918) chief economist Li Xunlei said in an exclusive interview with Chinese reporters of securities companies that the special meeting of the financial committee had made positive responses to the concerns of investors and basically eliminated everyone’s doubts. The stability and recovery of China concept stocks and Hong Kong stocks in the future can also be basically determined
Li Xunlei also said that from the perspective of opportunities, the opportunities brought by economic transformation are very large. For example, under the dual carbon economy, the growth of new energy, energy conservation and storage, environmental protection, electronics, advanced manufacturing and other industries will be further accelerated.
In the context of accelerating the opening-up of finance, how to resist the impact of overseas market fluctuations on the A-share market? In an interview with Chinese reporters from securities companies, Li Xunlei put forward many suggestions on the standardization and development of China’s capital market.
Among them, he mentioned that “more rigid constraints should be adopted to encourage Chinese enterprises, especially those with better cash flow, to pay attention to increasing the proportion of dividends in order to increase the rate of return of enterprises”.
Li Xuelei also pointed out that at present, 90% of the insurance companies in the insurance industry allocate less than 10% of their shares, which is far from the upper limit of 45% given by the regulatory authorities. He suggested that tax incentives, including VAT reduction and exemption, be given to long-term institutional investment products such as enterprise annuity and insurance; At the same time, for the long-term investment made by insurance and other institutions, the accounting subject reform of “long-term equity investment” priced by “cost method” can be set to solve the contradiction between high market volatility and low tolerance for net worth withdrawal, so as to attract long-term funds into the market.
Li Xunlei also suggested to further increase the pace of RMB internationalization and enhance the two-way opening of China’s capital market; It is suggested to allow overseas funds to invest in the domestic capital market on a larger scale, gradually enrich the supply of international varieties of financial futures, and encourage cross-border business development of domestic and foreign financial institutions.
the stabilization and recovery of Chinese stocks and Hong Kong stocks can be basically determined
brokerage China reporter: the “3.16” meeting of the financial commission of the State Council studied macroeconomic operation, real estate enterprises, China concept shares and other related issues. What do you think of the current macroeconomic operation?
Li Xunlei: the economic data of China from January to February have been released, and the indexes slightly exceeded expectations, indicating that the resilience of China’s economy is still relatively good. At the same time, the policy force is ahead, which has shown a positive effect. At present, China’s economy is facing downward pressure on potential growth, especially under the background of great uncertainty in the external environment. For example, when will the conflict between Russia and Ukraine end? Under the high inflation in the United States, the Fed’s interest rate increase and table contraction will affect the economic growth of the United States and lead to the outflow of US dollars from emerging markets.
At the same time, China’s economy is in the process of transformation and faces great challenges. For example, China’s economy has long been highly dependent on real estate, but from the perspective of economic transformation, we must adhere to the principle of housing without speculation. However, in the context of this year’s GDP target of 5.5%, it is difficult to achieve this target only by infrastructure investment. Therefore, the challenge is not only to make the growth rate of real estate investment not decline, but also to reduce the dependence on real estate. From the perspective of opportunities, the opportunities brought by economic transformation are very large. For example, under the dual carbon economy, the growth of new energy, energy conservation and storage, environmental protection, electronics, advanced manufacturing and other industries will be further accelerated. China’s economy is expected to improve significantly in the first half of the year compared with the second half of last year.
brokerage China reporter: recently, the stability of China stock and Hong Kong financial market has also been concerned by the capital market. What’s your opinion?
Li Xunlei: Chinese stocks and Hong Kong stocks have actually oversold, and the factors of oversold are more complex. First of all, since last year, China has proposed anti-monopoly and preventing the disorderly expansion of capital, and rectified and standardized many problems existing in real estate, medical treatment, education, Internet and other industries, so as to achieve the goal of a fair competition business environment and the equalization of public services. This is a poor expectation for investors who invested in stocks in the past; Secondly, the SEC of the United States has raised the regulatory requirements for China concept shares. For example, it has increased the information disclosure requirements for Chinese enterprises to list in the United States, included five China concept companies in the tentative list, and even put forward many audit requirements, which has greatly increased the delisting risk of China concept shares; Third, after the conflict between Russia and Ukraine, investors worried that some Chinese enterprises might be subject to sanctions, which led to the decline of share prices.
At the same time, Hong Kong stocks were also dragged down by China concept stocks. Under the influence of the departure of some foreign capital, there was an irrational decline. The special meeting of the financial committee made positive responses to the concerns of investors, which basically eliminated everyone’s doubts. For example, it is proposed that the CSRC and the US SEC should strengthen cooperation and consultation and strive to reach an agreement on the regulatory requirements for Chinese companies listed in the United States. It also puts forward clear principles and schemes for Internet platform enterprises and real estate enterprises on how to standardize development and risk prevention. Therefore, the stability and recovery of China concept stocks and Hong Kong stocks in the future can also be basically determined.
four suggestions to reduce the impact of overseas market on A-Shares
brokerage China reporter: in recent meetings of the national Standing Committee and the financial committee, it was mentioned that “we attach great importance to the impact of changes in the international situation on China’s capital market”. With the improvement of China’s financial opening to the outside world, China’s capital market and Chinese enterprises are facing both development opportunities and international challenges. What are your suggestions?
Li Xunlei: one of the reasons for the decline of China concept shares in the United States is that the SEC of the United States has increased the regulatory requirements for China concept shares, such as increasing the information disclosure requirements for Chinese enterprises to list in the United States, listing five China concept companies in the tentative list, and even putting forward many audit requirements, which has greatly increased the delisting risk of China concept shares and triggered the decline of China concept shares in the Hong Kong market, This in turn led to the decline of the A-share market.
under the background of accelerating the opening of finance to the outside world, in order to resist the impact of overseas market fluctuations on the A-share market, we have the following suggestions on the standardization and development of China’s capital market:
first, strengthen and standardize supervision, improve the quality of A-share listed companies and improve the corporate governance structure through strengthening the independence, professionalism and diligence of independent directors, give play to the role of the audit committee in reviewing financial reports and controlling illegal acts within the company, and strengthen the modernization of the governance system of listed companies; At the same time, adopt more rigid constraints to encourage Chinese enterprises, especially those with better cash flow, to pay attention to increasing the proportion of dividends in order to increase the rate of return of enterprises. And then enhance the market attractiveness of China’s equity market for long-term funds, including insurance funds and pensions.
second, strengthen the survival of the fittest, normalize the delisting policy and improve the quality of stock listed companies with the deepening of the reform of the registration system, it is more urgent to speed up the normal exit of low-quality listed companies. It is suggested to unblock the exit channels of the exchange, simplify the delisting process and improve the delisting efficiency; It is suggested to implement the undertaking responsibilities of the host securities companies, clarify the information disclosure obligations in the delisting process, and strengthen the punishment for evading delisting violations; It is suggested to set open and transparent delisting rules, and enterprises that meet the standards will be delisted automatically; Establish a secondary listing committee. Enterprises that meet the listing standards after delisting can apply for re listing or listing in the national stock transfer system to further reduce the difficulty of delisting.
third, encourage long-term funds to enter the market and increase the proportion of equity assets compared with other countries, on the one hand, China’s long-term capital scale is small and the proportion of equity assets held is very low. According to the “2020 risk assessment report of China’s insurance industry” released by China Insurance Guarantee Fund, 90% of the insurance companies in the insurance industry allocate less than 10%, which is far from the upper limit of 45% given by the regulatory authorities.
It is suggested to give tax incentives including VAT reduction and exemption to long-term institutional investment products such as enterprise annuity and insurance; At the same time, for long-term investments made by insurance and other institutions, the accounting subject of “long-term equity investment” priced by the “cost method” can be reformed, and the investment income can be calculated only at the beginning and end of the long-term investment period and exempted from income tax, so as to solve the contradiction between high market volatility and low tolerance for net value pullback. On the other hand, we will curb the “quick money making” behaviors such as short-term stock trading and real estate speculation, including differentiated capital gains tax, and increase the punishment for violations of the rights and interests of long-term investors such as financial fraud, insider trading and speculation.
fourth, further step up the internationalization of RMB and enhance the two-way opening of China’s capital market at present, the circulation market value of A-Shares held by foreign capital is less than 4% of the total circulation market value of a shares. We can adopt a step-by-step opening-up policy, which will form a pattern of “you have me and I have you”, which is also a powerful measure to deal with western financial sanctions. It is suggested to allow overseas funds to invest in the domestic capital market on a larger scale, gradually enrich the supply of international varieties of financial futures, and encourage cross-border business development of domestic and foreign financial institutions. This will help to jointly expand the scale of China’s capital market with foreign investors, improve the international business level of domestic financial institutions, and help the regulatory authorities strengthen their control over the investment actions of foreign investors.
At the same time, encourage more foreign companies to buy back shares in the mainland and Hong Kong, and reduce the price difference between H + and Hong Kong. At the same time, encourage mainland institutional funds to invest in the Hong Kong market for a long time, and enhance the voice of mainland institutional investors in the Hong Kong market.
