(Jan 14): China’s top securities regulator said it will work on building a mechanism to stabilise the market, vowing to anchor market expectations in 2025 after a disappointing start to the new year.
The China Securities Regulatory Commission (CSRC) said stability is top of its agenda in 2025 as it pledged to make every effort to induce and maintain the market’s stabilising and positive momentum, according to a statement following its work meeting on its priorities for the year.
The CSRC said it will work with the People’s Bank of China (PBOC) to enhance the effectiveness of two structural monetary policy tools, while strengthening the construction of a market-stabilisation mechanism.
Chinese stocks rose on Tuesday, leading gains in the region, with sentiment also aided by a report that members of US President-elect Donald Trump’s incoming economic team are discussing taking a gradual approach to ramping up tariffs. The CSI 300 Index, an onshore benchmark, gained as much as 1.7%, on track to end a four-day losing streak. The Hang Seng China Enterprises Index advanced more than 1%.
While the regulator didn’t provide details of how such a mechanism would work, it pledged to beef up its policy guidance, and added that it will promptly respond to market concerns.
One of the two structural monetary policy tools the CSRC referred to is a liquidity support facility that allows institutional investors to tap the PBOC for funding for stock purchases. The second is a swap facility that lets securities firms, funds and insurance companies obtain liquidity from the central bank to purchase equities. The initial amount of the tools is 800 billion yuan (US$109 billion or RM491.08 billion), and could be doubled or even tripled depending on demand, governor Pan Gongsheng said earlier.
The formation of a possible state-backed stabilisation fund was among the items in Beijing’s broad stimulus package unveiled in late September to revive the economy and markets. There’s been no update on progress since then, however.
“CSRC talk of stability is a step to boost confidence, but without specifics, it’s more of a signal than a game changer,” said Billy Leung, an investment strategist at Global X ETFs. “Long-term stability will likely need deeper reforms. Right now, this feels like a move to steady nerves rather than spark a big market shift.”
Investors have been shunning the Chinese equity market on concerns of increasing geopolitical risks and the country’s sluggish economic recovery. Stocks have stumbled in 2025 before Tuesday’s rebound, posting its worst performance for the start of any year since 2016.
The CSRC also pledged to streamline the entry of medium- and long-term capital into the market and enhance institutional inclusiveness and adaptability. The regulator added that it plans to increase connectivity between Chinese and global capital markets.
“This is a regular work meeting and what’s conveyed here should not go beyond what’s been said at the Central Economic Work Conference,” said Shen Meng, a director at Beijing-based boutique investment bank Chanson & Co. Stocks have fallen recently due to concerns including a second Trump presidency, “but the declines aren’t steep enough for authorities to introduce a stabilisation fund yet”.
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