Wu Qing speaks on long-term investments, public offerings, and the latest interpretation from fund companies

The highly anticipated Fourth Session of the 14th National People’s Congress economic-themed press conference was held as scheduled on the afternoon of March 6. Chairman Wu Qing of the China Securities Regulatory Commission (CSRC) attended and answered questions from reporters.

The slow bull market sentiment in A-shares provides a good market starting point for the beginning of the 14th Five-Year Plan, Wu Qing introduced at the press conference that currently, the demand from international investors for diversified asset allocation is increasing, and China’s asset attractiveness has significantly improved. The CSRC will focus on creating a first-class market-oriented, rule-of-law, international business environment, aiming to enhance cross-border investment and financing services, and further promote the two-way opening of markets, products, services, and institutions to a new level.

In response to regulatory calls to improve the long-term capital market mechanism, strengthen market stability, and serve new productive forces, many leading public fund companies quickly responded after the conference, providing the latest interpretations from perspectives such as the positioning of the capital market hub, long-term capital introduction, and the role of public funds.

The Capital Market is the Hub for High-Quality Development in the 14th Five-Year Plan

Wu Qing clearly stated at the conference that during the 14th Five-Year Plan period, China will improve its characteristic market stabilization mechanisms and enrich tools and mechanisms for cross-cycle and counter-cyclical adjustments. This statement is also interpreted as emphasizing the important role of the capital market in national strategy.

Fullgoal Fund pointed out that the government work report re-emphasized “raising the proportion of direct financing and equity financing,” which is not just a simple policy cycle echo but a strategic leap of the capital market from “financing tools” to “the cornerstone of the innovation ecosystem.” Under the new coordinates of building a strong financial nation, direct financing is shifting from a mere financing channel to a resource allocation hub.

Looking back over the past five years, the proportion of direct financing has risen to 31.97%, an increase of 3.2 percentage points from the end of the 13th Five-Year Plan. The scale of equity financing and cash dividends has grown in coordination, with strategic emerging industries accounting for 45% of the CSI 300 index. These quantitative and qualitative improvements have laid a solid foundation for deepening reforms during the 14th Five-Year Plan.

Against this backdrop, regulators are increasingly strict about the quality of listed companies. Caitong Fund analyzed that under the regulatory guidance of “supporting the good and limiting the bad,” the capital market has become highly transparent and standardized. Especially since the new “National Nine Regulations” in 2024, the trend of strict regulation driving high-quality development has become more evident. The core of this “strong regulation” cycle is to systematically improve the quality of listed companies and build a more solid value foundation for the capital market.

Caitong Fund further pointed out that the CSRC has optimized refinancing regulatory arrangements, with regulatory guidance clearly shifting toward strictly controlling incremental issuance and improving quality, guiding resources to high-quality enterprises serving national strategies and “hard technology.” The regulatory logic of the A-share private placement market is shifting from a focus on financing efficiency and scale to a new stage emphasizing financing quality, fund allocation, and market stability. This transformation, reinforced by the introduction of medium- and long-term funds, has jointly solidified the market’s value foundation.

Supporting Long-Term Capital and Investment, Serving as a Stabilizer and Ballast

The market mechanism and ecology for long-term capital and investment help further enhance market stability. “Medium- and long-term funds” is a frequently mentioned key term at this press conference. Wu Qing repeatedly emphasized consolidating and strengthening strategic reserve forces and stabilizing mechanisms, and further improving the mechanism for medium- and long-term funds to enter the market. For public funds, how to play the role of ballast and stabilizer has become a core industry consideration.

Wei Fengchun, Chief Economist at Chuangjin Hexin Fund, pointed out that public funds must adhere to political and people-oriented principles, practicing long-term value investment to implement national strategies and safeguard residents’ wealth, becoming a core force for stable market operation. Focusing on stabilizing mechanisms and the requirements for medium- and long-term funds to enter the market, public funds need to promote asset allocation reform, focus on new productive forces and strategic industries, and strengthen counter-cyclicality and cross-cycle deployment.

“More importantly, we need to improve long-term assessment systems, prioritize investors’ interests, let market dividends benefit the public, and truly play the role of ballast and stabilizer in stabilizing expectations and preventing risks,” Wei Fengchun said.

Huaxia Fund further explained the importance of “patient capital.” The company pointed out that developing new productive forces emphasizes original and disruptive technological innovation, which means long return cycles, high investment risks, and large capital needs. Developing patient and long-term capital helps promote the integration of technological and industrial innovation. As an important participant in the capital market, public funds should leverage their professional advantages in technology investment, guiding more social funds to transform into patient capital that supports new productive forces, fostering a virtuous cycle of “technology-industry-finance.”

E Fund also stated that it will always prioritize functionality, firmly place investors’ interests first, adhere to long-termism and professionalism. By continuously improving products suitable for medium- and long-term funds and optimizing services for such funds, E Fund aims to enhance investors’ sense of gain through sustainable performance and high-quality service, attracting more patient capital into the market via public funds, and helping to improve the market mechanism and ecology for long-term capital and investment.

Leading institutions have reached a consensus that only by truly implementing long-term capital and investment can market internal stability be strengthened, thereby better serving the real economy and national strategies.

Leading Public Funds Declare: Return to the Original Purpose, Serve New Productive Forces

Policy guidance is clear; how to implement it? Several leading public fund companies, leveraging their respective strengths, proposed specific implementation plans and product innovation ideas, demonstrating the responsibility of “public funds serving the public.”

In product innovation and capital matching, Chuangjin Hexin Fund provided specific optimization paths.

Wei Fengchun believes that in a macro environment characterized by low growth and low volatility, attracting medium- and long-term funds such as insurance, annuities, and social security requires addressing key product and capital matching bottlenecks. On the ETF front, focus on stability, expand high-dividend and low-volatility SmartBeta products, and launch multi-asset ETFs and fixed income + ETFs with low costs and high transparency to meet long-term risk control needs.

Additionally, regarding retirement target funds, Wei Fengchun pointed out the need to deeply optimize the decline curve and holding period design, precisely match annuity durations and insurance liabilities, add institutional-specific shares, and bind them with long-term assessments over three years. Through tiered fee structures and yield enhancement mechanisms, products can truly fit long-term capital and investment needs.

In assessment mechanisms and investor returns, Fullgoal Fund emphasized that the public fund industry is undergoing a profound shift from “scale-oriented” to “investor-centered.” For example, setting the weight of three-year or longer medium- and long-term return assessments at no less than 80%, incorporating fund profitability and investor profit ratios into the evaluation system, and building a closed-loop assessment focused on investor returns. Through platform-based, integrated research and development systems, the industry aims to create excess returns across cycles, contributing to high-quality development of the capital market by serving new productive forces and generating sustainable returns.

In supporting new productive forces and research capabilities, Huaxia Fund stated it will adhere to value investing and long-term investment, building a research system suited for new productive forces.

On one hand, it promotes technological innovation through direct investments in related fields, ensuring continuous financial support for industries aligned with national strategic needs; on the other hand, it emphasizes the signaling role of its sci-tech innovation funds, issuing more thematic funds covering industries related to new productive forces, guiding financial resources toward key core areas.

E Fund added that tech innovation companies often have characteristics such as high input, long cycles, and high operational uncertainty, with valuation logic differing from traditional valuation systems. E Fund will continue strengthening its core research capabilities, expanding research breadth and depth on new industries, new business models, and new technologies, improving its ability to research and value tech innovation companies, better discovering value and optimizing resource allocation.

In services for private placements and refinancing, Caitong Fund stated that the industry has entered a new stage of high-quality development, evolving from traditional scale competition to comprehensive development focusing on corporate governance, research strength, and compliance risk control. It will focus on enhancing investors’ sense of gain, preventing risks, and strengthening supervision, ensuring the implementation of relevant policies. With the optimization of refinancing mechanisms opening channels for public funds to participate in high-quality company valuation discovery, public funds will actively engage to support coordinated development of market investment and financing functions.

(Article source: Cailian Press)