Experts: Capital market will further spur real economy, stabilize growth

The latest policies introduced in the securities and property sectors will help further stabilize the A-share market and better serve the real economy, experts said on Friday.

A-share securities firms saw their share prices increase by an average 0.27 percent on Friday, while the benchmark Shanghai Composite Index climbed 0.13 percent to close at 3038.93 points.

The brokerages' gain came after China Securities Finance Corp Ltd, the country's only institution that provides loans to securities firms to fund their lending businesses, announced on Thursday night it will lower the loan rates by 40 basis points.

Effective from Friday, brokerages' borrowing costs for 182-day loans came in at 2.1 percent on an annualized basis. Rates of another four shorter-term margin fund loans were also cut by 40 basis points each.

The move, which is "normal operational adjustment based on the current interest rates", is aimed at "catering to securities brokerages' demand for lowering financing cost, promoting more legal capital to participate in market investment and safeguarding the stable and healthy development of China's capital market", CSF said in an announcement on its website.

It is the fourth time that CSF has lowered the margin fund loan rates. The previous three cuts effected in August 2014, March 2016 and August 2019 all led to a bullish performance in the A-share market, with the longest bull run lasting more than 18 months.

Tian Lihui, director of the Institute of Finance and Development at Nankai University, said the latest cut is positive news, and will translate to more capital inflows.

Chen Li, chief economist at Chuancai Securities, said trading activity and market liquidity will increase on lowered cost, helping improve securities firms' business.

Listed property developers also saw their A-share prices rise by 0.05 percent on Friday, as the China Securities Regulatory Commission, the country's top securities watchdog, was said to relax the financing measures from the A-share market for smaller real estate companies, China Securities Journal reported on Thursday.

Companies where this policy would apply need not be into real estate fully — meaning, property need not be their core business; and realty need not have contributed to more than 10 percent of the company's profit in the previous fiscal year.

Market mavens said A-share listed real estate companies' financing usually attracts extremely strict reviews of top regulators. Even if their financing requirements are approved, the capital raised thus is usually allowed to be used only for limited purposes.

Companies that qualify and whose property businesses account for a small proportion of their overall operations will likely accelerate their financing in the A-share market now, said Liu Shui, a researcher from the China Index Academy.

Some other companies will spin off their property businesses at a faster pace to be eligible for the new policy and raise financing from the market.

The capital market will be able to better support the real economy and help stabilize the country's economic growth. In less than a month, a number of supportive policies have been introduced to stabilize the property market, he said.