China’s Market Reforms Aim to Lure Investors to Stocks and Bonds. They May Not Be Enough.

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Chinese regulators are looking to institute longer trading hours, lower transaction fees, and more share buybacks by listed companies.

It’s reform season in China. Various arms of the government are mobilizing in a campaign to juice a lackluster post-Covid recovery. The China Securities Regulatory Commission pitched in Aug. 18, with a long list of proposed measures to “boost investor confidence” in the country’s volatile securities markets.

On macroeconomic paper, now would be a perfect time for Chinese to pour money into stocks and bonds. Household savings in the No. 2 economy have mushroomed by 60%, or about $7 trillion, since prepandemic 2020, says Andy Rothman, an investment strategist at Matthews Asia. That perception tends to be self-fulfilling. The iShares MSCI China A exchange-traded fund , which tracks onshore stocks, rose by two-thirds in a year to February 2021, and has lost it all since then.

 

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