In a recent press conference held by the National Financial Supervisory Administration, significant plans were announced aimed at boosting long-term investments in China’s capital markets, which are part of broader efforts to enhance the quality and stability of financial growthThis initiative is particularly crucial as it responds to the evolving economic landscape, marked by a shift towards a more sustainable investment approach that guarantees healthier and more resilient market conditions.

The policymakers have put forth specific measures that target various investment sectors, notably public funds and commercial insuranceUnder these new regulations, public funds are expected to increase their holdings in A-shares—those shares listed on stock exchanges in mainland China—by at least 10% annually over the next three yearsThis commitment is a clear indicator of intent to gear the funds towards supporting a robust capital market.

Moreover, the targeted engagement from commercial insurance funds is expected to yield substantial results

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State-owned insurance institutions are being encouraged to allocate 30% of their newly added premiums into the A-share market starting in 2025. This strategic move is projected to inject several billion yuan into the market each yearAdditionally, the launch of a pilot program for long-term stock investments by insurance funds is set to kick off in the first half of 2025, aiming for an initial scale of no less than 100 billion yuan, with plans for gradual expansions thereafter.

Another notable aspect of the recent announcements includes the extension of assessment periods for investments to encourage a focus on long-term performance rather than short-term gainsThe guidelines suggest that public funds, state-owned insurance companies, as well as pension and annuity funds need to establish long-term evaluation mechanisms that span over three yearsThis shift in emphasis is particularly important in reducing the weight of annual performance evaluations, which can often pressure companies into short-sighted decision-making.

Wang Qing, an official from the Financial Supervisory Administration, elaborated on additional initiatives, mentioning that a significant number of listed companies will be encouraged to provide 'red envelopes'—a traditional practice during the Lunar New Year where companies offer dividends to investors

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Over 310 firms are anticipated to distribute dividends totaling more than 340 billion yuan before the upcoming Chinese New Year, indicating a proactive approach in enhancing shareholder value during a festive period.

Vice Minister of the National Financial Supervisory Administration, Xiao Yuanqi, noted that ahead of the Lunar New Year, an upfront allocation of 50 billion yuan from the second phase of long-term insurance capital investment in stocks would rapidly be put into playThis timely infusion of capital is expected to bolster market enthusiasm and investor confidence during a critical season.

The stock market reacted positively to these announcements, with evidence of brisk trading activityAs of the latest updates, the Shanghai Composite Index surged over 1.8%, with nearly 4700 A-shares recording ascentsAmong the leading sectors experiencing growth, non-bank financials led the way with insurance indices climbing nearly 6%—a testimony to the market's positive reception of the newly unveiled policies.

As of January 22, reports indicated that market financing totaled approximately 1.81 trillion yuan, a slight decline compared to previous trading sessionsAnalysis reveals that eight out of eleven primary industry sectors experienced an uptick in financing balancesPrimarily, the banking sector contributed the most significant increase, followed by food and beverage, building decoration, and transport industriesNotably, 23 sectors saw declines, including computing, telecommunications, and electronics, all exhibiting substantial drops in financing balances.

In terms of specific stocks, January 22 recorded 251 stocks with net financing gains exceeding 10 million yuan, and 15 stocks achieving net inflows above 100 million yuan

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Industrial Fulian topped the list with a net purchase of 639 million yuan, followed by renowned brands like Cambricon and Kweichow Moutai, revealing a strong interest in high-profile, performance-driven companies.

Among the stocks making waves with significant net purchases, Jianghai Automobile stood out, with reported financing entering the equity pool equating to 8.68% of its market capThis indicator illustrates the investor confidence in the auto sector during a transformative period as the industry aligns with sustainability initiativesOther industries garnering considerable financing interest included precision manufacturing and financial technology, showcasing a trend where investors are leaning towards sectors perceived as promising in sustainable growth.