China will encourage listed companies to revamp their assets and do more to boost their market values as part of the nation’s broad stimulus package to revive economic growth and burnish the appeal of the US$8.4 trillion stock market.
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Listed companies should use mergers and acquisitions to improve their asset quality and come up with plans to monitor and boost market capitalisation, the China Securities Regulatory Commission (CSRC) said in two documents published on its website on Tuesday to gather public comments.
CSRC chairman Wu Qing first disclosed the policies at a joint press conference by the nation’s financial regulators hours earlier, in which the central bank also unveiled 800 billion yuan (US$114 billion) in new funding for stock purchases and pledged to cut interest and mortgage rates.
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The fresh package of stimulus measures came after China’s benchmark stock index dropped to its lowest level in more than five years this month and all key economic data in August fell short of expectations. A half-point interest-rate cut by the Federal Reserve last week has given China more leeway to escalate its policy loosening without weakening the yuan or triggering capital outflows.
“The announcements are positive for the broader equity market given potential additional fund inflows, greater levels of buy-backs and, in the long run, more corporate governance enhancement,” said James Wang, head of China strategy at UBS Group in Hong Kong.
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