Heavy! Issued by the Central Financial Office and the China Securities Regulatory Commission

The China Securities Regulatory Commission reported on September 26 that in order to implement the spirit of the Third Plenary Session of the 20th Central Committee of the Communist Party of China and the Central Financial Work Conference, implement the deployment of the Political Bureau of the CPC Central Committee on September 26, vigorously guide the medium and long-term funds into the market, open up the social security, insurance, wealth management and other funds into the market, and strive to boost the capital market.

The main measures include: building a capital market ecosystem that encourages long-term investment; vigorously develop equity public funds and support the steady development of private securities investment funds; Efforts should be made to improve the supporting policies and systems for all kinds of medium and long-term funds to enter the market.

The China Securities Journal reporter learned that the main goal of the "Guiding Opinions" is to promote the scale and proportion of medium and long-term capital investment after a period of efforts, the structure of investors in the capital market is more reasonable, the long-term investment behavior and the internal stability of the market are comprehensively strengthened, the return of investors is steadily improved, and the concept of medium and long-term value investment is deeply rooted in the hearts of the people, forming a new situation in which medium and long-term funds play a better leading role, the development of investment and financing ends is more balanced, and the function of the capital market is better played.

The issuance of the "Guiding Opinions" provides a clear "action plan" for accelerating the entry of medium and long-term funds into the market and improving the function of the capital market that coordinates investment and financing. It is reported that in the next step, under the overall coordination of the Central Financial Office, the China Securities Regulatory Commission will work with relevant ministries and commissions to strengthen policy coordination and information sharing, strengthen work efforts, and ensure the implementation of various measures of the "Guiding Opinions".

Overview of key points

Enrich the types of investable assets of public funds, and establish a fast approval channel for ETF index funds

Establish and improve the long-term assessment mechanism of more than three years for medium and long-term funds such as commercial insurance funds and various types of pensions

Break down the institutional barriers that affect the long-term investment of insurance funds

Enrich the long-term investment model of commercial insurance funds

Supervise and guide state-owned insurance companies to optimize the long-term assessment mechanism

Improve the investment policy system of the national social security fund and the basic pension insurance fund

Support qualified employers to liberalize individual investment options for enterprise annuities

Encourage enterprise annuity fund managers to explore differentiated investment

Encourage bank wealth management and trust funds to actively participate in the capital market and increase the scale of equity investment

Vigorously develop equity public funds

As an important institutional investor, public funds play an important role in promoting medium and long-term capital entry into the market. The "Guiding Opinions" proposes to vigorously develop equity public funds.

Ma Quansheng, chief strategic analyst of Wells Fargo Fund, said that to vigorously develop equity public funds, we should strengthen investment and research capacity building and improve the incentive mechanism. Investment and research capabilities are the key to improving fund performance and service quality, as well as winning the trust of investors and providing investors with higher quality investment products and services. Optimize product structure and strengthen compliance supervision. Promote product innovation to meet the needs of different investors. While innovating, it is also necessary to strengthen compliance supervision and protect the legitimate rights and interests of investors. Enhance investor education, through investor education, improve investors' understanding of equity funds, and guide rational investment. In-depth understanding of customer needs, providing customized investment solutions, and enhancing the investment experience and people's sense of gain.

China Asset Management believes that for public funds, on the one hand, it is necessary to increase the performance stability of fund products and effectively improve the sense of gain of fund investors through measures such as the gradient construction of investment and research talents, the design of long-term assessment system, and the guidance and accompaniment of investors. On the other hand, it is also necessary to base itself on its own professional advantages, realize differentiated and characteristic operations, and continuously enrich product types to meet the diversified investment and financial needs of different types of investors, and at the same time provide the service capabilities of the whole chain of wealth management.

The "Guiding Opinions" also proposes to steadily reduce the comprehensive rate of the public fund industry and promote the pilot investment advisory of public funds to become regular. According to public information, the China Securities Regulatory Commission (CSRC) will launch the rate reform of the public offering industry in July 2023, and the first two phases of work have been completed, and the third phase will be completed by the end of this year. A reporter from the China Securities Journal learned that in the third stage, the China Securities Regulatory Commission will focus on standardizing the fees for the sales link. With the implementation of all reform measures, the comprehensive fee rate of public funds will be reduced by 18%, saving investors about 45 billion yuan per year.

Establish and improve a long-term assessment mechanism of more than three years

In terms of supporting long-term investment, the "Guiding Opinions" proposes to establish and improve a long-term assessment mechanism of more than three years for medium and long-term funds such as commercial insurance funds and various types of pensions, and promote the establishment of long-term performance orientation.

In the view of market participants, the long-term assessment is one of the key measures to enhance the stability of investment operations, from the practical point of view, in addition to the national social security fund in the long-term funds actively practice the long-term assessment, annuity funds, insurance funds and other short-term assessment problems, affecting the stability of investment and long-term investment returns. Among them, the short-term assessment of annuity funds is more prominent, the assessment pressure of agents and trustees is transmitted layer by layer, the mentality of investment managers seeking stability is prominent, and the portfolio is difficult to withstand short-term large fluctuations in the market.

In addition, there are generally short-term assessment problems in the equity of unlisted enterprises and stock investment of listed companies, which inhibits the enthusiasm and stability of equity investment of insurance companies, and makes it difficult to give full play to the attributes of long-term funds. In October 2023, the Ministry of Finance clarified that the "return on net assets" of state-owned insurance companies will implement a combination of "three-year cycle + current year" assessment method, which will help improve the enthusiasm and stability of insurance companies' equity investment, and has made some progress, but there are still problems such as excessive weight of "current year profit" index assessment and low weight of medium and long-term assessment indicators, and short-term market fluctuations still have a great impact on the performance of insurance companies.

By building an assessment system that connects investment management institutions, investment managers, product portfolios and other levels, and establishing and improving a management system that is compatible with long-term assessment, it is conducive to reducing the impact of short-term market fluctuations on the investment performance of medium and long-term funds, promoting all kinds of medium and long-term funds to better practice the concept of long-term investment and value investment, and better playing the role of the capital market as a "stabilizer" and "ballast stone".

The "Guiding Opinions" clearly put forward "cultivating and strengthening patient capital such as insurance funds, breaking through the institutional obstacles that affect the long-term investment of insurance funds, improving the assessment and evaluation mechanism, enriching the long-term investment model of commercial insurance funds, improving the regulatory system for equity investment, supervising and guiding state-owned insurance companies to optimize the long-term assessment mechanism, and promoting insurance institutions to be firm value investors and providing stable long-term investment for the capital market." ”

China Asset Management believes that to break through the institutional barriers that affect the long-term investment of insurance funds, on the one hand, it is necessary to guide the long-term evaluation of supervision, shareholders and society. Since 2023, the insurance industry has begun to implement the new Financial Instruments Standard (IFRS9) for financial reporting, which has led to increased profit volatility under the financial statements. Under the new standard, the number of assets classified as "trading financial assets" has increased significantly, resulting in a significant increase in the number of assets accounted for by listed insurance companies in the form of profit or loss at fair value, which in turn has increased the profit volatility of enterprises. In the short term, this has led to large fluctuations in insurance stocks and heated discussions in public opinion about the soundness of insurance operations. Based on the long-term nature of the assets and liabilities of the insurance industry, the evaluation of insurance companies should also uphold the long-term nature, and affirm and encourage the patient investment of insurance funds. In terms of regulatory evaluation, shareholder evaluation, and social evaluation, it is necessary to change the short-sighted evaluation method that has been formed for a long time.

On the other hand, it is also necessary to actively create a stable and safe investment environment for insurance companies. Due to the pressure of solvency, the investment safety of insurance funds is the first priority, so it is necessary to enable the investment projects of insurance funds to form cash flow returns that match the insurance liabilities. For example, insurance funds are further encouraged to invest in infrastructure construction such as water conservancy, water transportation, logistics, energy, and minerals, and at the same time, insurance funds are encouraged to actively seek investment opportunities in projects such as two new and one heavy, so as to develop together with the real economy.

ICBC Credit Suisse Fund said that in general, advocating long-term assessment is not only conducive to the return of management institutions to the source of investment, strengthen the capacity building of asset allocation, but also conducive to the preservation and appreciation of annuity funds and the stable and healthy development of the capital market.

Improve the investment policy system of the national social security fund and the basic pension insurance fund

The National Social Security Fund and the Basic Pension Insurance Fund are the cornerstones of the multi-level social security system, shouldering the responsibility of providing solid financial guarantee for actively responding to the aging of the population, and are also an important part of the medium and long-term funds in the capital market.

Among them, since the establishment of the National Social Security Fund, the average annualized rate of return of domestic stock investment has exceeded 10%, becoming a model of long-term investment and value investment in the A-share market, but the proportion of equity investment has been close to the upper limit of the policy, and the scale growth has been limited in recent years, making it difficult to further expand the scale of equity investment.

On the one hand, the basic pension insurance fund entrusted by the provinces to invest in the basic pension insurance fund contract period is longer, but there are generally income guarantee requirements, limiting the enthusiasm and stability of equity investment. On the other hand, the risk appetite of the basic pension insurance fund client is low, and the market-oriented investment operation has not been fully realized, and more attention is paid to the guarantee of principal and income, and more investment is invested in fixed income products, which is difficult to significantly increase the proportion of equity investment in the short term.

Hu Jiye, chairman of the academic committee of the Business School of China University of Political Science and Law and professor of the Department of Finance, believes that the "Guiding Opinions" clearly put forward the "improvement of the national social security fund, the basic pension insurance fund investment policy system", will expand the source of funds of the national social security fund, optimize the entrusted investment model of the basic pension insurance fund, and improve the market-oriented operation level of the basic pension insurance fund, which is conducive to promoting the formation of a positive interaction between the pension security system and the capital market, and realizing the "two-way running" of the maintenance and appreciation of the value of the pension fund and the healthy development of the capital market.

ICBC Credit Suisse Fund said that the "Guiding Opinions" are conducive to supporting the development of the third pillar of personal pensions and expanding long-term sources of funds. On the one hand, we can continue to improve policy support, promote the expansion of coverage, and allow more people to participate in the personal pension system. On the other hand, by strengthening the education of individual investors, participants can choose strategies and products that match long-term investment, fully enjoy the excess returns of assets such as stocks, and also increase long-term funds for the capital market.

Institutional investors such as insurance funds are allowed to participate in private placements in the capacity of war investment in accordance with the law

It is worth mentioning that the "Guiding Opinions" proposes to allow institutional investors such as insurance funds and various types of pensions to participate in the private placement of listed companies as strategic investors in accordance with the law. This has attracted much attention from the market.

A reporter from the China Securities Journal learned that in accordance with the current regulations of the China Securities Regulatory Commission on the refinancing of listed companies, compared with general investors, participating in the private placement of listed companies as strategic investors can enjoy the policy of lock-in issuance. The pricing reference date for general investors to participate in the private placement of listed companies is the first day of the issuance period, while strategic investors can choose between the announcement date of the resolution of the board of directors of the listed company, the announcement date of the resolution of the general meeting of shareholders and the first day of the issuance period, which enables the strategic investor to lock in a relatively favorable issue price earlier. Shares subscribed for by strategic investors are not transferable for 18 months (usually 36 months in practice) and 6 months for general investors.

In August last year, the relevant person in charge of the China Securities Regulatory Commission answered reporters' questions on activating the capital market and boosting investor confidence, and informed the market that the national social security fund could participate in the private placement of listed companies as a strategic investor. In September this year, SDIC Power issued 550 million A-shares to the Social Security Fund, which was the first time that the National Social Security Fund participated in the private placement of listed companies as a strategic investor.

SDIC Power said that through strategic cooperation, it not only provides the company with financial support for long-term development, but also the social security fund can also bring the company clean energy project development, upstream and downstream cooperation in the industrial chain and the company's overall strategy and other synergistic resources, so as to improve the company's competitiveness in the field of clean energy.

In the view of market participants, allowing institutional investors such as insurance funds and various pensions to participate in the private placement of listed companies as strategic investors in accordance with the law can effectively enhance the enthusiasm and stability of institutional investors such as insurance funds and various pensions to participate in the capital market, and is conducive to the long-term and long-term funds to increase long-term returns through relevant mechanisms.

Support qualified employers to liberalize the individual choice of enterprise annuity

With the accumulation of annuity operation time, the management experience of the employer has been matured, and the investor education level of the majority of employees has been continuously improved, and the conditions for choosing differentiated investment strategies have gradually been met.

The "Guiding Opinions" clearly state that "qualified employers should be supported to liberalize the individual choice of enterprise annuity".

Ma Quansheng believes that in the past three years, despite the fluctuations in the capital market, the development of pension funds such as enterprise annuity and occupational annuity has been stable, and the participation in the equity market has also reflected stable characteristics, especially in the past two years, the performance of dividend investment and value investment is even more remarkable. However, compared with overseas markets, the employee coverage of mainland enterprise annuities is relatively small, and the choice of investment policy is relatively simple, and employees do not have the right to choose investment policies. Some portfolios adopt fixed-income investment strategies, which cannot meet the equity allocation needs of some young employees. The "Guiding Opinions" support qualified employers to liberalize the individual investment options of enterprise annuities, which is conducive to increasing the flexibility of young entities to invest in the equity market and enhancing the participation of enterprise annuities in the equity market, especially for young employees who are younger in age and pursue long-term returns.

The "Guiding Opinions" also proposes to "encourage enterprise annuity fund managers to explore differentiated investment", which can effectively improve the situation of investment convergence and lack of determination by encouraging all participants to carry out differentiated investment from top to bottom.

ChinaAMC believes that differentiated investment means that fund managers can formulate corresponding investment strategies according to investors' age, income, risk appetite and other factors. On the one hand, it helps to realize the personalized service of pension funds, increase the diversity of investment options, improve the efficiency of fund use, and meet the specific needs of different groups; On the other hand, by moderately increasing the allocation of equity assets, pension funds can also provide a long-term source of funds for promoting the stable development of the capital market.