China's Stock Market Witnesses Revival post Implementation of Economic Recovery Measures

By: Asia Business Outlook Team | Monday, 04 September 2023

On September 4, shares on China's two-year-old Beijing stock exchange posted their best daily performance ever, following the country's announcement of reform measures to improve the market, which focuses on smaller innovative tech firms.

The China Securities Regulatory Commission (CSRC) said on Friday that it would foster innovation in Beijing's exchange to energise the capital market and boost investor confidence, leading to a 5.9 percent increase in the Beijing Stock Exchange 50 Index.

The CSRC's action comes on top of several other market and economic stimulus measures implemented in recent weeks, as China's post-COVID economic recovery has slowed since the second quarter, and a worsening property crisis has alarmed investors.

The Beijing exchange focuses on funding innovative small companies, known as "little giants", that specialise in niche sectors. Shares in Long Bamboo Technology Group, Hunan Wuxin Tunnel Intelligent Equipment Co and Panzhihua Bing Yang Technology Co jumped by between 20 per cent and 30 per cent and led the gains among the 217 listed companies in the market.

Since its inception in April 2022, the Beijing exchange 50 index has lost 15%.

The CSRC aimed to increase market liquidity by lowering investor thresholds and improving trading mechanisms. According to the CSRC, the team of market-makers will be expanded, and all shares listed on the market will be eligible for margin financing.

"The measures are a package of gifts for the two-year anniversary of the Beijing exchange," NS Capital Co. founder Zhou Yunnan said. "It would be beneficial to the market's high-quality development and would boost investor confidence."

The CSRC also announced measures to ease listing rules and improve the quality of listed companies. The regulator stated that it will advise more mutual funds to increase their market investments.