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Recently, "100 Questions for Studying and Guiding the Decision of the Third Plenary Session of the 20th CPC Central Committee" was published. When talking about "Why we need to improve the capital market function of coordinating investment and financing", the book points out that promoting the coordination of investment and financing functions is of great significance to the long-term and healthy development of the capital market. The next step will be to do a good job in four aspects: improving services and returns to investors, strictly regulating financing behavior, strengthening continuous supervision, and strengthening investor protection.

The market has expanded rapidly in the past few years, and liquidity has been unbalanced.

The book points out that the capital market mainly includes the stock market and the bond market, which are closely related to the operation of finance. After more than 30 years of development, my country's capital market has achieved remarkable achievements. Especially since the 18th National Congress of the Communist Party of China, the capital market supervision system has been continuously improved, the reform of the stock issuance registration system has been steadily promoted, and the construction of a multi-level capital market has been carried out in a solid manner. The capital market has played a positive role in promoting the optimal allocation of resources and promoting economic development. By the end of 2023, the three stock exchanges in Shanghai, Shenzhen and Beijing had a total of 5,346 listed companies with a total market value of approximately 78 trillion yuan. Among the newly listed companies, technology innovation accounts for more than 70%, and the market value of listed companies in the high-tech industry accounts for more than 40%. The bond market ranks second in the world, with a bond market custody balance of 15.8 trillion yuan.

At the same time, we should also see that the foundation for the healthy and stable development of my country's capital market is not yet solid. Since 2020, more than 1,500 new listed companies have been added nationwide, and the financing amount in 2022 and 2023 ranked first in the world for two consecutive years. However, the main stock indexes were relatively sluggish during the same period, and investors did not feel a strong sense of gain, which shows that there is an imbalance in the investment and financing functions of the stock market. The main reasons are that the market has expanded rapidly and liquidity has been unbalanced; some listed companies have distorted financial data and "changed performance" after listing; investor protection is not in place, and supervision of illegal and irregular behaviors such as financial fraud, illegal dividends and reductions, insider trading, and market manipulation needs to be strengthened.

We must establish a development concept that emphasizes both investment and financing

The book lists three points on the significance of promoting the coordination of investment and financing functions for the long-term healthy development of the capital market:

First, it is in line with the general law of capital market development. On the one hand, the capital market supplies funds and provides financing services for the real economy; on the other hand, it creates investment channels for investors so that they can obtain investment returns. The investment function and the financing function are two sides of the same coin of the capital market function. The healthy development of the capital market is inseparable from the complementary functions of investment and financing. The imbalance between the two not only inhibits the normal function of the capital market, but also affects the healthy development of the capital market. It is necessary to establish a development concept that gives equal importance to investment and financing.

Second, it is conducive to further enhancing the investment function of the capital market. Promoting the coordination of the investment and financing functions of the capital market can attract social funds to enter the market, promote the conversion of residents' savings into equity investment, and provide a source of fresh water for the capital market. It is not only conducive to promoting the steady development of the capital market, improving capital market expectations, increasing residents' property income, promoting consumption and expanding effective demand, but also conducive to the real economy to obtain financial support and give play to the role of the capital market in effectively allocating resources.

Third, it can better play the financing function of the capital market. The coordinated development of investment and financing functions can increase the proportion of direct financing, optimize the financing structure, guide funds to key areas, important industries and weak links of the national economy, and provide high-quality financial services for the real economy.

Four aspects of work will be done

Regarding how to promote the coordination between the investment and financing functions of the capital market in the next step, the book proposes that four aspects of work need to be done well:

First, improve services and returns to investors. Improve equity investments such as insurance, bank wealth management, trust funds, social security funds, basic pensions, enterprise annuities, and personal pensions, launch financial products and services that match investor needs, reform the industry's comprehensive rates, and give investors benefits. Build a policy system that supports "long-term money and long-term investment" and improve assessment and evaluation, taxation, investment accounts and other systems that are conducive to long-term investment behavior.

Second, strictly regulate financing behavior. Issuance and listing is the first step in market financing. We must deepen the reform of the stock issuance registration system, improve the listing standards of the main board and the Growth Enterprise Market, improve the evaluation standards of the scientific and technological innovation attributes of the Science and Technology Innovation Board, strengthen information disclosure requirements, and improve the pricing mechanism for new stock issuance. Further standardize the mandatory delisting standards and strictly enforce and implement delisting.

Third, strengthen continuous supervision. Strengthen supervision of listed companies, strictly enforce information disclosure and corporate governance requirements, strengthen supervision of share reduction, dividends, mergers and acquisitions, and strengthen the responsibilities of listed companies and their shareholders, actual controllers, directors, senior executives, and other personnel. Strengthen supervision of trading links, and severely investigate and punish market manipulation, malicious short selling, and other behaviors. Strengthen supervision of intermediary institutions, and punish illegal and irregular behaviors such as financial fraud. Strengthen supervision of securities and fund institutions, strengthen the requirements for fulfilling duties and responsibilities, promote the establishment of a long-term assessment mechanism, and shift from scale orientation to investor return orientation.

Fourth, strengthen investor protection. Further increase the cost of illegal activities in the securities industry, improve the investor compensation and relief mechanism, and compensate investors for losses according to law for controlling shareholders, actual controllers, directors, senior executives, intermediary institutions, etc. who are responsible for illegal and irregular activities. Implement the special representative litigation system for securities disputes. Popularize financial investment and risk knowledge and strengthen investor education.