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

Cailian Press, March 7th (Reporter Yan Jun) 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 6th. CSRC Chairman Wu Qing 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, international investors’ demand 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 during the 14th Five-Year Plan

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

Fortune 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 coordinate system 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, and strategic emerging industries account for 45% of the CSI 300 index. These quantitative and qualitative improvements lay a solid foundation for deepening reforms during the 14th Five-Year Plan.

Against this background, regulators are increasingly strict about the quality of listed companies. Caitong Fund analyzed that under the regulatory guidance of “supporting the excellent and limiting the inferior,” 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 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 ballast and stabilizer

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 the conference. Wu Qing repeatedly emphasized consolidating and strengthening strategic reserve forces and stabilizing market mechanisms, and further improving the entry mechanism for medium- and long-term funds. For public funds, how to play the role of ballast and stabilizer has become a core industry consideration.

Wei Fengchun, Chief Economist of Chuangjin Hexin Fund, pointed out that public funds must adhere to political and people-oriented principles, practicing national strategies through long-term value investment and safeguarding residents’ wealth, becoming a core force for stable market operation. In line with stabilizing market 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-cyclical 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 roles of ballast and stabilizer in stabilizing expectations and preventing risks,” Wei Fengchun said.

Hua Xia Fund further explained the importance of “patience capital.” The company pointed out that developing new productive forces emphasizes original and disruptive technological innovation, which entails long return cycles, high investment risks, and large capital needs. Developing patience 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 tech investment, guiding more social funds to transform into patience 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 enhancing service capabilities, they aim to improve investors’ sense of gain through sustainable performance and high-quality service, attracting more patience 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: only by truly implementing long-term capital and investment can market internal stability be strengthened, better serving the real economy and national strategies.

Leading public funds: returning to fundamentals and serving new productive forces

Policy guidance is clear. How to implement it? Several leading public fund companies, leveraging their respective advantages, have 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 of low growth and low volatility, attracting medium- and long-term funds such as insurance, pensions, and social security depends on breaking through product and capital matching bottlenecks. For ETFs, focus on stability, expand high-dividend and low-volatility SmartBeta varieties, and launch multi-asset ETFs and fixed income + ETFs with low costs and high transparency to meet long-term risk control needs.

Additionally, for pension target funds, Wei Fengchun emphasized the need to optimize the downward curve and holding period design, precisely matching annuity durations and insurance liabilities, setting up institutional-specific shares, and linking them to long-term assessments over three years or more. Through tiered fee structures and yield enhancement mechanisms, products can truly adapt to long-term capital and investment.

In assessment mechanisms and investor returns, Fortune Fund emphasized that the public fund industry is undergoing a profound transformation 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 participation into the evaluation system, creating a closed loop focused on investor returns. Through platform-based, integrated research and development systems, they aim to cultivate the ability to generate excess returns across cycles, contributing to high-quality development of the capital market by serving new productive forces and creating sustainable returns.

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

On one hand, direct investments in fields related to new productive forces promote technological innovation, ensuring continuous financial support for industries aligned with national strategic needs; on the other hand, they emphasize the signaling role of their 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 investment, long cycles, and high operational uncertainty, with valuation logic differing from traditional valuation systems. E Fund will continue strengthening core research capabilities, expanding the breadth and depth of research on new industries, new business models, and new technologies, improving valuation and research capabilities for tech innovation companies, better fulfilling the functions of value discovery and resource optimization.

In services for private placements and refinancing, Caitong Fund stated that the industry has entered a new stage of high-quality development, shifting from traditional scale competition to comprehensive development focusing on corporate governance, research strength, and compliance risk control. They will focus on enhancing investors’ sense of gain (“customer-centric”), preventing risks, strengthening supervision, and implementing relevant policies. With the optimization of refinancing mechanisms opening channels for public funds to participate in discovering the value of high-quality companies, public funds will actively participate to promote coordinated development of market investment and financing functions.