China is set to roll out multiple measures through a guideline to introduce more medium- and long-term funds into its capital market, Wu Qing, chairman of the China Securities Regulatory Commission, announced on Tuesday.

Wu Qing, chairman of the China Securities Regulatory Commission, speaks at a press conference held by the State Council Information Office (SCIO) in Beijing on Sept. 24, 2024. [Photo by Xu Xiang/China SCIO]

The measures include developing equity mutual funds, optimizing the institutional environment, and enhancing the market ecosystem, Wu said at a press conference held by the State Council Information Office. He highlighted the role of medium- and long-term funds as stabilizers of the capital market.

Specifically, the guideline will motivate funds to create more products that meet public demand, in an effort to generate long-term returns for investors, Wu said.

Recently, 10 new CSI A500 exchange-traded funds (ETFs) were launched, quickly reaching their fundraising limits.

In addition, the registration process for equity funds will be streamlined, innovation in indexed products will be encouraged, more small- and mid-cap ETFs will be introduced, and the fees in the mutual fund industry will be steadily reduced, Wu said.

According to the guideline, regulatory flexibility will be increased for medium- and long-term investments, with an evaluation cycle of three years or more, Wu said.

The guideline will also promote positive interaction between the pension system and the capital market, and encourage corporate pension funds to explore diverse investment options based on the ages and risk preferences of their holders.

Improvements will also be made to the investment policies for the national social security fund and basic old-age insurance funds, Wu said.

Efforts to enhance the market ecosystem include raising the quality and investment value of listed companies, improving supporting systems that enable the participation of institutional investors in corporate governance of listed companies, and cracking down on illegal activities in the market, the chairman of the commission said.

By the end of August, professional institutional investors, including equity mutual funds, insurance funds, and various pension funds, held a combined free-float market capitalization of nearly 15 trillion yuan (US$2.14 trillion) in A-shares, more than doubling the amount since the beginning of 2019. Their share of the A-share free-float market capitalization has risen from 17% to 22.2%, according to Wu.