Investing.com-- China’s new market value management reforms could significantly enhance investor confidence and foster long-term investments, UBS analysts said in a note.
The measures focus on improving corporate governance, information disclosure, and shareholder returns, with a particular emphasis on state-owned enterprises (SOEs), analysts said.
The reforms, outlined by the China Securities Regulatory Commission (CSRC) in November, encourage companies to increase dividend payouts, implement share buybacks, and enhance transparency to attract “patient capital.” UBS noted that the People’s Bank of China is facilitating these efforts through structural monetary tools, including a special re-lending facility to support buybacks and shareholding increases.
Strengthening the sense of investor gains is central to these reforms, to create a more investor-oriented A-share market, UBS analysts wrote.
They highlighted the 7% year-over-year rise in dividends paid by A-share companies, with over RMB 100 billion distributed in early 2025, a marked increase from just RMB 800 million during the same period last year.
SOEs stand to gain the most from these reforms, given their historically lower valuations compared to non-SOEs, analysts said. UBS identified the re-rating of SOEs as a key driver for potential stock market rallies and the development of “new quality productive forces.”
The report also underscored the role of regulatory initiatives such as improved executive performance appraisals linked to market value management and stricter penalties for financial misconduct.
UBS concluded that companies embracing the reforms—particularly through higher dividend payouts and corporate buybacks—could see significant stock price outperformance.