Beijing, China — Central regulators are intensifying efforts to improve the market value of State-owned enterprises (SOEs) as a means to enhance their competitiveness and support high-quality economic development. Experts emphasize that improving the overall quality of A-share companies will benefit investors through higher profitability.
During a recent work conference, the State-owned Assets Supervision and Administration Commission (SASAC) announced plans to integrate market value management into the performance appraisal system for executives at listed SOEs. This initiative aims to create a more precise and regulated appraisal system that considers individual company characteristics while aligning with shared performance standards.
Enhanced Appraisal System for SOE Executives
SASAC’s focus on a differentiated appraisal system is intended to drive SOEs to enhance their core competitiveness and fulfill responsibilities in technological innovation and industry control. Vice-Premier He Lifeng also highlighted the importance of fostering the high-quality development of listed companies to bolster market confidence and stabilize the capital market.
Li Xunlei, chief economist at Zhongtai Securities, pointed out that the investment value of listed companies is closely tied to their quality development. Strengthening corporate governance, particularly regarding the responsibilities of major shareholders and board members, will contribute to operational stability.
Improving Information Disclosure and Investment Value
Li proposed that a robust information disclosure mechanism be implemented to ensure timely communication of changes in company fundamentals. This initiative could start with SOEs to enhance the frequency and quality of disclosures. Analysts from CITIC Securities noted that as China advances its capital market reforms, there will be a renewed focus on enhancing the investment function of the capital market, encouraging companies to stabilize and improve dividends.
Market Confidence and Recent Regulatory Measures
Market confidence has faced challenges earlier this year due to investor actions that negatively impacted A-share indexes. However, the China Securities Regulatory Commission’s recent decision to temporarily restrict lending of all restricted shares is expected to address these concerns. Despite a decline in benchmark indices, there was a notable net inflow of over 1.74 billion yuan ($240 million) from overseas investors into A shares.
Experts from China International Capital Corp Ltd suggest that a series of recent policies aimed at stabilizing the economy and boosting investor confidence are beginning to show positive effects, with increasing stock buybacks among listed companies.
Outlook for the A-Share Market
As positive signals emerge from regulatory and capital initiatives, analysts believe there is potential for recovery in the A-share market, suggesting that a pessimistic outlook for medium-term performance may be unwarranted. The combination of improved corporate governance, enhanced market regulations, and increased foreign investment is expected to bolster confidence in China’s economic landscape.