How to truly embrace new productivity? ,China Capital Market
On June 19, the 2024 Lujiazui Forum was held. As global inflation is still at a high level and the interest rate hike policy of the European and American central banks is uncertain, how to promote sustained and stable economic growth in a period of uncertainty has become a highly concerned issue at the Lujiazui Forum. The new quality productivity frequently mentioned by the guests at the forum is undoubtedly the key to promoting economic development.
In his keynote speech at the Lujiazui Forum, Wu Qing, Chairman of the China Securities Regulatory Commission, mentioned that the capital market should "actively embrace the development of new productivity." New productivity is rooted in the real economy, is the driving force for corporate development, and can bring more fresh water to the capital market. From this point of view, choosing to serve new productivity is also the nature of the capital market.
But in reality, there are still many bottlenecks from the capital market to enterprises focusing on new quality productivity. For example, in the early stages of the development of technology companies, especially in the pre-profit period, without the basis of revenue data, how to select high-quality "hard technology" companies for priority support is a very practical operational problem. This is also one of the reasons why China has always lacked long-term and patient capital.
A person from an overseas asset management institution gave an example at the Lujiazui Forum that in the mid- and late-stages, China's innovation financing is better than that of other countries, with nearly 90% of funds involved in the final IPO commercial transformation stage, but in the early stages, 47% of R&D projects could only obtain 4% of financing.
In other words, to cultivate new quality productivity, the capital market also needs innovation.
For example, we should cultivate more long-term institutional investors who invest early and invest in small companies, and research and release more new policies and mechanisms to support new productivity. On the other hand, the problem of "chaos if you let it go, and death if you control it" is still being discussed repeatedly. At the forum, some people believed that finance should emphasize its "service attributes", make use of policies to deepen reforms, and promote financial markets to serve the real economy.
Another voice believes that while promoting financial reform and innovation, market risks will also increase. It is necessary to balance market development and supervision, use "strong supervision" to ensure the smooth opening of the domestic financial industry and protect the market rights and interests of investors.
In fact, both statements are correct. The key is how to properly resolve the relationship between regulation and innovation under the guidance of policies and optimize the investor structure steadily and gradually so that the capital market can better embrace the development of new quality productivity.
On the same day as the Lujiazui Forum opened, the China Securities Regulatory Commission issued the "Eight Measures for the Science and Technology Innovation Board" to deepen the reform of the Science and Technology Innovation Board. Many of the provisions, such as strengthening the "hard technology" positioning of the Science and Technology Innovation Board, conducting pilot projects to deepen the issuance and underwriting system, and optimizing the equity and debt financing system of Science and Technology Innovation Board listed companies, are specifically focused on "hard technology" companies and have also lowered the threshold for patient capital to enter.
Of course, in the process of promoting the development of new quality productivity in financial services, policies and regulatory agencies are not omnipotent. Regulators cannot decide whether a company is high-quality on behalf of the market. Instead, they should use more advanced, open and transparent regulatory means to balance market risks and safeguard market development.
The "Eight Measures for the Science and Technology Innovation Board" proposed to "strengthen the full-chain supervision of listed companies on the Science and Technology Innovation Board", which is a further improvement of the market supervision of the Science and Technology Innovation Board. It can be seen that the sound supervision and service attributes of the financial market are like the left and right hands, jointly protecting the growth of "hard technology" companies.
Only by achieving a dynamic balance between regulation and innovation can the financial market truly serve new productivity, allow market entities with high-quality development to give back to investors, and form a virtuous cycle of "technology-industry-finance."
