Financial Regulation

Financial Regulation - 2Q20 Sector Overview

How Are China’s Regulatory Bodies Responding to Increasing Market Pressures?

Due to the COVID-19 outbreak, in 1Q20, China’s GDP dipped 6.8% YoY, a very rare occurrence over the last four decades. As the initial effects of the coronavirus outbreak have been waning in China, the country’s authorities now are focusing on supporting nationwide production resumption and stabilizing national employment.

Specifically, financial watchdogs are trying to improve the effectiveness of the financial market to provide more support for companies, such as lowering interest rates and offering more sources for loans. Additionally, Chinese regulators are implementing reforms to the capital market, an important place for enterprises to raise money, to improve connectivity between different stock markets like the ChiNext Board, NEEQ and STAR Market. Piloting a registration-based IPO system on the ChiNext Board is one of the top priorities. In this way, the Chinese government is aiming to build a multi-layered capital market that can accommodate different types of companies.

For more information about major Chinese financial regulatory highlights and events, download our Q2 China Financial Regulation Sector Overview.

Key Topics Covered:

China’s central bank is not opting for quantitative easing compared to other major economies
ChiNext Board will undergo changes to emulate successes of the SSE STAR Market, especially its registration-based IPO system, as part of China’s capital market transformation
Financial regulators continue efforts on channeling medium to long-term funds to invest in the capital market, such as boosting institutional investors

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