More than 5,000 enterprises have been listed on the A-share market, with the total market value surpassing 85 trillion yuan ($12.02 trillion), as China’s capital market continues to attract global investors amid the nation’s steady recovery, a senior official said on Thursday.
Thanks to China’s sustained high-quality expansion in economic development, the capital market has now become the world’s second largest, holding the largest and most actively traded investor base worldwide while the incremental development of the financial derivatives market is delivering one-stop and diversified investment options for global capital holders, Fang Xinghai, deputy head of the China Securities Regulatory Commission (CSRC) said at the 2023 Global Investor Conference.
China’s financial market does not follow the same economic cycle as overseas financial markets, and there are differences in correlation between Chinese assets and other global assets, highlighting the value of China’s assets in global portfolios, Fang stressed.
Despite China’s economic growth rebound, some Western media outlets have been hyping China’s stock market as “falling into a bear market” amid investors’ “increasing pessimism” about the country’s economic recovery.
The claim is just a short-term analysis, while China’s capital market is indispensable ballast for economic development, experts noted, stressing that China’s capital market remains a haven for international capital flow amid the potential collapse of some Western capital markets, including the US.
Short-term data reflects the obstacles China is facing amid an economic pick-up, while the recovery momentum for the long run remains strong, Dong Dengxin, director of the Finance and Securities Institute of the Wuhan University of Science and Technology, told the Global Times on Friday.
Dong stressed that the economic recovery from COVID-19 is progressing rapidly, and consumer confidence will gradually be restored following the continuous pick-up.
For instance, Dong noted that the overall pick-up in consumption is fully reflected in the booming market response to the recent May Day holidays.
Dong said that the US financial market is already facing a bubble that could further trigger global financial risks, adding that international capital will seek another haven to hedge against risks.
Fang noted that overseas capital has been flowing into China’s A-share market, with 170 billion yuan coming in through the Shanghai and Shenzhen stock exchanges so far in 2023. Foreign investment has increased by more than 11 times through the Qualified Foreign Institutional Investor and RMB Qualified Foreign Institutional Investor programs and the Shenzhen Stock Connect.
Responsible authorities in China have been stepping up efforts to promote the deepening and strengthening of the registration-based IPO system, with the focus being shifted to allocating more resources to support scientific and innovative enterprises, Wang Jianjun, vice chairman of the CSRC said in a summit earlier in May.
The CSRC will guide market resources into scientific and innovative enterprises and better serve the national innovation-driven development strategy, said Wang, adding that he supported the expansion and development of high-quality listed companies by optimizing institutional arrangements.
China’s stock market closed with major indexes edging up on Friday. The Shanghai Composite Index edged up 0.79 percent and the Shenzhen Component Index recorded a 1.5 percent gain, while the ChiNext Index closed up 1.22 percent.