Equities revive after a range of liberalization measures is announced but more may be needed to help revive a market deep in the doldrums.

China’s securities regulator is going to try to turn around the deep bear market in domestic equities with a broad swathe of market-opening measures, according to an interview published on Wednesday.

China Securities Regulatory Commission (CSRC) vice-chairman Wang Jianjun gave the interview to Xinhua News agency and it was subsequently uploaded to the supervisory website in Chinese.

In the interview, Jianjun indicated that equity prices had suffered several setbacks this year. The war in Ukraine, rising US Federal Reserve Interest Rates, the continued impact of the pandemic, and generalized economic pressure on growth. In his mind, however, the risks appeared controllable given the limited scale of leveraged funds in the market.

Upgraded Connect Schemes

But now the CRSC appears to be at pains to do everything seemingly possible to pry open the Chinese equities markets. He indicated an imminent expansion of the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect cross-border investment channels with the inclusion of Exchange-Traded Funds (ETFs) while mentioning efforts would be made to better optimize a similar Shanghai-London Stock Connect mechanism.

Surprisingly, Jianjun announced it intended to promote the issuance and listing of depositary receipts, such as the ADRs typically used by a swathe of Chinese companies for listings on US exchanges.

He also sought to implement regulations that would support a higher number of companies being able to list in Hong Kong, the US, Europe, and other countries while also making it easier for foreign companies to list A-shares in China.

A Raft of Broad Measures

The CSRC also was looking to reduce or exempt annual issuer fees on Chinese exchanges and reduce burdens on listed companies. More generally, it seeks to stabilize the market by continuing the reforms underway related to the stock issuance registration system and market access.

Jianjun said the CSRC suggested listed companies look at buying back more shares, increase dividends, and garner stakes from major investors. It would also institute measures allowing a wider number of institutions to be able to increase their holdings of equities and look at implementing a plan for pension investments.

Market Volatility

The Shanghai Composite and Hang Seng indexes appeared to react positively on the day to the interview. Very generously rounded, they were both up near 1 percent. But still, both indexes remain deep in a bull market. The former has declined by 15 percent since the beginning of the year and the latter is down 16 percent.

The question on many investors’ minds heading into tomorrow is whether this will be enough to placate the market beyond a few days and put it in better shape to face the headwinds much of the world is currently seeing.