China’s top securities regulator, the China Securities Regulatory Commission (CSRC), has outlined its commitment to stabilizing the stock market and boosting investor confidence following a disappointing start to 2025. In a statement following its work meeting, the CSRC prioritized stability for the year ahead, vowing to anchor market expectations and make every effort to induce positive momentum in the market.
The regulator emphasized its collaboration with the People’s Bank of China (PBOC) to enhance two key structural monetary policy tools aimed at supporting the market. The CSRC also expressed its intention to establish a robust market-stabilization mechanism, though specific details on how this would be implemented were not provided.
On Tuesday, Chinese stocks rose, marking a rebound after a four-day losing streak. The CSI 300 Index, a major onshore benchmark, gained as much as 1.4%, while Chinese shares listed in Hong Kong saw gains of over 1%.
While the CSRC did not elaborate on the mechanism’s specific workings, it stated that it would bolster its policy guidance and respond swiftly to market concerns. Among the policy tools highlighted by the CSRC are a liquidity support facility for institutional investors, which allows them to access funds from the PBOC for stock purchases, and a swap facility enabling securities firms, funds, and insurance companies to obtain liquidity from the central bank for equity purchases. The initial amount for these tools is set at 800 billion yuan ($109 billion), with the potential for expansion depending on demand.
The formation of a state-backed stabilization fund was part of Beijing’s stimulus package unveiled in September to revive the economy and markets, though there has been no update on its progress. Despite the CSRC’s assurances, some experts caution that the lack of concrete details limits the immediate impact of these measures.
“CSRC talk of stability is a step to boost confidence, but without specifics, it’s more of a signal than a game-changer,” said Billy Leung, investment strategist at Global X ETFs. He added that long-term stability would likely require deeper structural reforms.
Investor sentiment has been weighed down by concerns over geopolitical risks and China’s sluggish economic recovery. This has led to a slow start for the stock market in 2025, with Chinese equities experiencing their worst performance in a year’s opening since 2016, before Tuesday’s rebound.
In addition to market stabilization efforts, the CSRC pledged to streamline the entry of medium- and long-term capital into the market and to enhance institutional inclusiveness and adaptability. The regulator also plans to increase connectivity between Chinese and global capital markets.
However, analysts, including Shen Meng, a director at Chanson & Co., noted that while the CSRC’s remarks signal a desire to stabilize the market, there are no immediate signs of drastic interventions like the creation of a stabilization fund. The recent market declines have been relatively modest, and as such, authorities may hold off on major interventions for now.
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