Promoting Development through Reform The capital market can better serve the new quality of productive forces

The Decision of the Central Committee of the Communist Party of China on Further Deepening Reform and Promoting Chinese-style Modernization (hereinafter referred to as the "Decision") deliberated and adopted by the Third Plenary Session of the 20th Central Committee of the Communist Party of China proposes to accelerate the formation of production relations that are more compatible with the new quality of productive forces, promote the agglomeration of various advanced production factors to the development of new quality productive forces, and greatly improve the total factor productivity. Encourage and regulate the development of angel investment, venture capital, and private equity investment, give better play to the role of government investment funds, and develop patient capital.

The development of new quality productivity is an intrinsic requirement and an important focus to promote high-quality development, and the capital market has the characteristics of risk sharing and benefit sharing, which is in line with the development characteristics of scientific and technological innovation enterprises. To serve the development of new quality productivity, the capital market is duty-bound. The Party Committee of the China Securities Regulatory Commission recently conveyed the spirit of the Third Plenary Session of the 20th Central Committee of the Communist Party of China, saying that it would further enhance the inclusiveness and adaptability of the capital market to scientific and technological innovation, cultivate and expand patient capital, do a good job in the five major articles of finance, and guide more resource elements to gather new quality productivity.

Shenwan Hongyuan Securities believes that promoting the development of new quality productivity is the key to high-quality economic development, and it is also an important starting point for improving the quality of listed companies and improving the long-term stable return level of the capital market. The Third Plenary Session of the 20th Central Committee of the Communist Party of China (CPC) pointed out the direction for building an institutional mechanism that adapts to the new quality of productive forces, and also made clear arrangements for comprehensively deepening the reform of the capital market. The capital market is a product of reform, and it is also growing stronger in the course of reform, and the capital market should enhance its ability to serve new productive forces by further deepening systemic reform.

It is incumbent upon the capital market to serve the new quality of productivity

High-quality development is the primary task of building a modern socialist country in an all-round way, and the development of new quality productive forces is an intrinsic requirement and an important focus for promoting high-quality development. At present, new quality productivity is in the ascendant in the mainland, and has formed a strong driving force and support for high-quality development. The "Decision" attaches great importance to the development of new quality productive forces, improves total factor productivity through reform, puts forward higher requirements for the construction of a modern industrial system, and cultivates new momentum for economic growth. As a matter of fact, since the second half of last year, the CPC Central Committee has made arrangements for the development of new quality productive forces on many occasions.

China Galaxy Securities Research Institute believes that the "Decision" emphasizes that "improve the system and mechanism for the development of new quality productivity according to local conditions", which provides a fundamental follow and action guide for breaking through the blocking points that restrict the development of new quality productivity in the new era and new journey, accelerating the development of new quality productivity, and helping to promote Chinese-style modernization.

Serving the development of new productive forces is an unshirkable responsibility of the capital market, and it is also an opportunity for the high-quality development of the capital market. High-quality enterprises that represent the development direction of new quality productivity can bring more source of fresh water to the capital market and allow investors to better share the fruits of high-quality economic development; The deepening reform of the capital market can further enhance the inclusiveness and adaptability of the capital market to scientific and technological innovation, and promote the steady and far-reaching development of the capital market.

Li Chao, chief economist of Zheshang Securities, believes that the "Decision" has further pointed out the direction for the development of new quality productivity, and the latest deployment of the China Securities Regulatory Commission has opened up new space for the capital market to better serve new quality productivity, which is of great significance for stabilizing market expectations and effectively enhancing market vitality, efficiency and attractiveness. Li Chao said that the economic development and scientific and technological progress based on the new quality of productive forces require the capital market to give full play to the functions of pricing and resource allocation. Revolutionary breakthroughs in technology, innovative allocation of production factors, and in-depth transformation and upgrading of industries have put forward higher requirements for pricing and resource allocation efficiency, and it is necessary to form price signals around the investment value of enterprises, reflecting various factors such as industry, entrepreneurial ability, technology, talent, risk and internal and external environment, pricing key elements and underlying assets, effectively converting funds with different risk appetites and maturities into social capital, and promoting the allocation of various factors to the key areas of total factor productivity improvement.

Increase the tolerance of new quality productivity

In June this year, Wu Qing, chairman of the China Securities Regulatory Commission, said at the opening ceremony of the 2024 Lujiazui Forum that the development of new quality productivity includes not only cultivating and expanding emerging industries, laying out and building future industries, but also the transformation and upgrading of traditional industries. The top priority at present is to conduct in-depth research on the characteristics and development laws of relevant enterprises and their needs in terms of investment and financing, incentives and constraints, corporate governance, etc., and enrich the tools, products and services of the capital market in a targeted manner.

With the in-depth development of a new round of scientific and technological revolution and industrial transformation, future industries such as artificial intelligence, autonomous driving, and industrial automation are constantly emerging, and the connotation of new quality productivity is rich. "The capital market should enhance the tolerance of new quality productivity and support different types of enterprises to develop new quality productivity." Shenwan Hongyuan Securities said that the capital market should fully consider that the new quality of productivity represents the evolution direction of advanced productivity, and does not represent a certain type of industry, a certain type of ownership of enterprises, so the development of new quality productivity requires the joint efforts of enterprises of different ownership. When serving the new quality of productivity, the capital market should avoid "labeling", grasp the industrial development trend from the perspective of "new" new quality productivity, identify high-quality companies from the perspective of "quality", fully tap the new driving force of future economic development, and improve the return on investment of the capital market while serving the high-quality development of new quality productivity, so as to form a virtuous circle.

In recent months, policies to promote the capital market to better serve new quality productivity have been implemented one after another. On April 12, the State Council issued the "Several Opinions on Strengthening Supervision and Preventing Risks and Promoting the High-quality Development of the Capital Market" (hereinafter referred to as the "New 'National Nine Articles'") proposed to enhance the inclusiveness of new industries, new forms of business and new technologies, better serve the implementation of national strategies such as scientific and technological innovation, green development, and reform of state-owned assets and state-owned enterprises, as well as the development and growth of small and medium-sized enterprises and private enterprises, and promote the development of new productive forces. On June 19, the China Securities Regulatory Commission (CSRC) issued the "Eight Measures on Deepening the Reform of the Science and Technology Innovation Board to Serve the Development of Scientific and Technological Innovation and New Quality Productivity" (hereinafter referred to as the "Eight Measures of the Science and Technology Innovation Board"), aiming to enhance the inclusiveness of the Science and Technology Innovation Board for new industries, new forms of business and new technologies through further reform.

Analysts believe that the capital market should accelerate the formation of a comprehensive financial service model that supports scientific and technological innovation, and actively promote financial investment and entity investment in terms of conceptual cognition, innovative methods, investment returns and valuation methods, and serve science and technology finance well. The capital market reform, represented by the new "Nine Measures" and "Eight Articles of the Science and Technology Innovation Board", is expected to provide new impetus for China's scientific and technological innovation.

The direction of capital market reform is clear

The "Decision" proposes to "improve the basic system for promoting the standardized development of the capital market" and "improve the function of the capital market that coordinates investment and financing, prevent risks, strengthen supervision, and promote the healthy and stable development of the capital market".

With the high-quality development of the economy, the capital market will continue to improve in the deepening of reform. Wanlian Securities Research Institute believes that from the "Decision", the policy pays more attention to improving the construction of the capital market system and long-term healthy development. By giving better play to the functions of the capital market, we will support the development of new productive forces and scientific and technological innovation. It is expected that more achievements in the subsequent deepening reform of the capital market will be implemented.

Chen Li, chief economist of Soochow Securities and vice chairman of Soochow Hong Kong, said that the "Decision" provides clear guidance for the reform and development direction of the capital market, which is conducive to improving the vitality and efficiency of the capital market, and helping to promote high-quality economic development and socialist modernization.

He Haifeng, chief economist of Guotai Junan, believes that it is necessary to adhere to the reform to promote development and stability, further improve the multi-level capital market system, improve the coverage and accuracy of services, enhance the adaptability and inclusiveness of the system, and strengthen patient capital. At the same time, we will carry out a comprehensive assessment of capital market reform and promote the continuous deepening of important institutional reforms such as the stock issuance registration system.

Source: Financial Times-China Financial News Network