Investing.com– China’s new market worth administration reforms may considerably improve investor confidence and foster long-term investments, UBS analysts stated in a be aware.
The measures give attention to enhancing company governance, data disclosure, and shareholder returns, with a selected emphasis on state-owned enterprises (SOEs), analysts stated.
The reforms, outlined by the China Securities Regulatory Fee (CSRC) in November, encourage corporations to extend dividend payouts, implement share buybacks, and improve transparency to draw “affected person capital.” UBS famous that the Individuals’s Financial institution of China is facilitating these efforts via structural financial instruments, together with a particular re-lending facility to assist buybacks and shareholding will increase.
Strengthening the sense of investor features is central to those reforms, to create a extra investor-oriented A-share market, UBS analysts wrote.
They highlighted the 7% year-over-year rise in dividends paid by A-share corporations, with over RMB 100 billion distributed in early 2025, a marked enhance from simply RMB 800 million throughout the identical interval final yr.
SOEs stand to achieve probably the most from these reforms, given their traditionally decrease valuations in comparison with non-SOEs, analysts stated. UBS recognized the re-rating of SOEs as a key driver for potential inventory market rallies and the event of “new high quality productive forces.”
The report additionally underscored the function of regulatory initiatives equivalent to improved govt efficiency value determinations linked to market worth administration and stricter penalties for monetary misconduct.
UBS concluded that corporations embracing the reforms—notably via increased dividend payouts and company buybacks—may see vital inventory value outperformance.
