In keeping with the broader theme set by China’s economic decision-makers, the country’s securities regulator said that it will push for “quality growth” of exchange bond markets this year.
Speaking at the 22nd China Capital Markets Forum (第22届中国资本市场论坛) on 13 January, Zhang Shenfeng (张慎峰), chair assistant at the China Securities Regulatory Commission, said that “China’s exchange bond market has already shifted from the rapid growth phase to the high quality growth phase, when quality and efficiency will increase.”
According to Zhang in 2018 CSRC will “deepen reform of exchange bond markets,” apply stricter regulation, as well as “endeavour to drive high quality market growth, and steadily raise the percentage of direct financing.”
“The stock market and bond market are the key components of capital markets, and are mutually supporting and reinforcing…the coordinated development of the stock market and bond market is of benefit to overall structural optimisation of finance, and a strong bond market is of benefit to the healthy and stable growth of the stock market,” said Zhang.
Zhang outlined three key areas of reform work in relation to China’s bond markets for the securities regulator in 2018, the first being “further strengthening self-awareness and capability to service supply-side structural reforms.”
This will include improving the multi-tier assessment system for supporting high-quality issuers and restricting low-quality issuers; strictly restricting financing for zombie enterprises or companies with poor credit, as well as helping to resolve the problem of overcapacity in certain key industries.
CSRC will provide “vigorous support to the bond financing needs of high-quality companies and major state projects, actively guide compliant participation in bond transactions by various funds, expand the depth and capacity of exchange bond markets, stably develop asset securitisation business, and by means of PPP projects, asset securitisation, real estate investment trust funds and other methods, further invigorate the storehouse of assets.”
The regulator also hopes to “continue to stably drive the growth of the bond derivatives market, accelerate the diversification of treasures bond futures products, and improve the hedging structure.
The second area of reform will involve “deepening the reform and opening of bond market, and raising the ability of the bond market to service national strategy.”
CSRC will “actively promote systemic reform in the areas of issuance, transaction and settlement; effectively reduce transaction costs… improve incentive mechanisms, and actively cultivate an excellent bond market investment culture.”
The third area of reform will be market regulation, with Zhang saying that the regulator will endeavour to protect the lawful rights and interests of investors.