The development of a coordinated investment and financing system is becoming increasingly essential for fostering a high-quality capital marketThis concept not only underscores the need for a harmonized approach to financing but also serves as a vital mechanism to enhance the inherent stability of the capital market itselfEssentially, achieving balance can be viewed through three critical lenses: ensuring overall quantitative balance, fostering continuous qualitative improvement, and maintaining effective checks and balances in responsibilities and rights.

To commence with the overall quantitative balance, it’s paramount to understand that investment and financing are two sides of the same coin, intricately intertwined and mutually reinforcingA robust capital market should serve as a platform for quality enterprises to secure financing while simultaneously guaranteeing stable returns for investors.

However, the reality paints a different picture

Since 2020, China has seen a surge in the number of newly listed companies—over 1,500—and during the years 2022 and 2023, financing in the capital market led globallyIn stark contrast, major stock indices have remained relatively sluggish, diminishing the sense of satisfaction for regular investors.

Finding a balance between investment and financing becomes crucial to capitalize on the market's role as a cornerstone for economic advancementWu Qing, a notable analyst, emphasizes the urgency of implementing guidelines for medium- to long-term funds to enter the market effectivelyThere’s a pressing need to ramp up the development of equity public funds while categorically addressing obstacles hindering the infusion of such funds into the marketBuilding a policy framework that supports “long money for long investments” is critical.

Recently, various initiatives have been set in motion to inject liquidity into the capital markets and enhance the availability of long-term funds

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Notably, on October 18, two innovative monetary policy tools were introduced: the securities and fund companies' swap facilities and the stock repurchase loan schemeA few days later, on October 20, an announcement from 23 listed companies confirmed that they had entered loan agreements with banks to use these funds for repurchases or stock increases, marking a significant step in the application of these loan facilities to bolster their market presenceFollowing this, the People's Bank of China revealed a groundbreaking operation worth 50 billion yuan aimed at supporting these initiatives.

According to Shen Juan, the chief analyst at Huatai Securities, the introduction of these structural monetary policy tools will contribute meaningfully to the development of capital marketsThey are expected to enhance the ability of participating institutions to access funds, stimulate corporate stock buybacks, and ultimately inject a more stable capital into the market, thereby helping mitigate volatility and reinforce the market’s internal stability.

In pursuit of the overall quantitative balance, Wu Qing proposed several measures that should be initiated to enhance the performance of the capital market regarding financial endeavors

These include refining the coordination mechanisms between primary and secondary markets to create a more logical and scientific pacing for market financing that reflects true economic conditions.

Experts believe that improving the coordination between these markets can herald the normalization of Initial Public Offerings (IPOs). Recently, the market has been characterized by sluggish trading and weakened investor sentiment leading to a slowdown in new offerings and refinancing activitiesThis strategic decompression can lessen the pressure of equity financing on the secondary market liquidityAs market confidence begins to rise, it will be essential to maintain a scientifically justified, consistent cadence of new stock issuances to reclaim the stock market's financing capabilities and facilitate better coordination between investment and financing.

Moving onwards, the aspect of raising the quality of listed companies must not be overlooked

Listed companies represent the bedrock of the market and the source of value creationTo fortify the investment and financing development framework, it’s imperative to channel efforts into enhancing the quality of these companies—this means guiding and supporting them to leverage avenues like mergers and acquisitions, thereby boosting their core competitiveness and managing their market valuations responsibly.

In September of this year, significant policies were implemented to energize the mergers and acquisitions landscape, focusing on propelling new productive forces, enhancing industrial integration support, amplifying regulatory tolerance, increasing payment flexibility, and improving intermediary servicesAs a result, numerous high-quality mergers are seamlessly coming into fruition, particularly among companies eager to pivot towards new growth sectors.

A pertinent example is Nanhua Instruments, which announced on October 11 its intention to acquire a controlling interest in Jiade Li, intending to expand its operations into the field of digital cleaning equipment, aiming for a second growth trajectory that enhances its overall competitiveness.

Chen Gang, the chief strategist at Dongwu Securities, noted that effectively utilizing mergers and acquisitions positions the industry for a synergistic outcome beneficial to resources, local governmental finances, and the capital market itself

Mergers that adhere to industrial logic can amplify scale efficiencies, consolidate the industry, and fortify resilience—strengthening the overarching competitive landscape on both a domestic and international scale.

Market value stands as one of the most crucial indicators within the capital market, encapsulating the intrinsic worth of listed companiesThere’s an increasing expectation for these companies to diligently practice market value management and ensure substantial returns to their investors.

In response, many listed companies are proactively engaging in campaigns aimed at improving both quality and returns, which has seen a record increase in dividend distributions and stock buybacksAs of the end of September, over 95% of listed companies held performance briefings, collectively announcing mid-year dividends amounting to 533.7 billion yuanIn total, more than 1,500 companies participated in share repurchase programs, pooling an impressive figure exceeding 100 billion yuan.

“Bolstering the investment quality of listed companies while strengthening value management is absolutely crucial

It is imperative for these entities to embrace their responsibilities,” remarked Professor Tian Lihui from Nankai University, stressing that all related parties must heighten their compliance consciousness and navigate the legal boundaries of value management without resorting to illicit tactics.

The third component of establishing effective checks and balances in responsibilities and rights has also featured prominently within industry discussions, especially given the recent wave of listed companies unveiling reduction plansWhile data indicates that there has been no mass illegal reduction activity, regulatory bodies promptly administered measures to address isolated infractionsWu Qing noted the importance of supporting legitimate reductions while punishing those straying into illegal activities, sending a clear message that appropriate corrective actions would be enforced.

To ensure an environment of sound governance and accountability, it’s essential to clarify the responsibilities of all parties involved in investment and financing

This involves meticulous regulatory oversight to ensure compliance from listed companies and their major shareholders, in conjunction with bolstered protections for investors, ensuring that the investment landscape remains equitable, efficient, and transparent.

Key stakeholders, including major shareholders and executives, hold unique responsibilities within a companyWhile they enjoy the basic right to divest shares, there comes an expectation for these individuals to uphold the interests of the company and minority shareholders, practicing their divestiture strategies in line with established guidelines.

Historically, shareholder misconduct related to unnecessary reductions has been under intensified scrutinyAuthorities have instituted stringent measures to block all loopholes facilitating circumvention of share reduction norms—leading to a significant tally of penalties against such actions announced this year alone.

Looking ahead, regulatory authorities are prepared to maintain a strict stance on compliance across all aspects of public offerings, disclosure practices, and share reductions