China Unveils Measures to Boost Index Investment and Shore Up Equity Market
In a bid to revitalize the ailing equity market amidst a turbulent global economic landscape, China has implemented new measures to promote the development of index investment products.
The China Securities Regulatory Commission (CSRC) aims to enhance the scale and proportion of index investment within the capital market over time. It plans to bolster the asset allocation function of index funds and simplify access for medium- and long-term funds into the market.
To attract foreign capital, the CSRC intends to encourage investments in yuan-denominated A-share markets via exchange-traded funds (ETFs). It will actively foster the development of equity and bond ETFs to diversify investment options.
Furthermore, the regulator will strive to reduce index fund costs and waive market-making fees for index products.
China's equity market has faced headwinds in recent months due to concerns over prolonged economic deceleration and potential tariff hikes by the United States. Despite government stimulus efforts, traders remain skeptical about the effectiveness of these measures.
CSRC Chairman Wu Qing recently announced that the government is guiding mutual funds and insurers to increase stock investments. Mutual funds are expected to raise their onshore equity holdings by a minimum of 10% per annum over the next three years, while large state-owned insurers will allocate 30% of new policy premiums to equity investments from 2025.
Separately, China has approved 52 billion yuan for insurers' long-term equity investments, as reported by China Banking and Insurance News.