China Unveils Measures to Bolster Index Investment Amid Market Turbulence
In a bid to mitigate the impact of global economic volatility on its domestic stock market, China has announced a suite of initiatives to foster the growth of index investment products.
The China Securities Regulatory Commission (CSRC) seeks to enhance the scale and prevalence of index investment within the capital market over time. The commission aims to strengthen the asset allocation role of index funds and facilitate access for medium- and long-term funds.
CSRC intends to attract foreign capital into the yuan-denominated A-share market through exchange-traded funds (ETFs) and promote the development of equity and bond ETFs.
Furthermore, the commission plans to lower the costs associated with index funds and exempt market-making fees.
Recent market pressures stemming from economic slowdown concerns and potential tariff increases by the United States have weighed heavily on Chinese stocks.
CSRC Chairman Wu Qing emphasized the government's guidance for local mutual funds and insurers to increase their stock investments. Mutual funds are expected to incrementally raise their domestic equity holdings by 10% annually for the next three years, while major state-owned insurers are required to allocate 30% of new policy premiums to equity investments from 2025.
Separately, China has approved 52 billion yuan ($7.2 billion) for long-term equity investments by insurers, according to China Banking and Insurance News.