Financial Street Forum annual meeting focuses on capital markets to help develop new productive forces
The 2024 Financial Street Forum Annual Meeting is currently underway, and the main forum titled “Promoting High-Quality Development of the Capital Market through In-Depth Reform” has sparked significant discussions among experts. They are particularly focused on enhancing the functions of the capital market to support the development of new productive forces.
Howard Davies, Chairman of the International Advisory Committee of the China Securities Regulatory Commission, noted that compared to the U.S., both the European and Chinese banking systems are larger and tend to favor bonds over equities within their capital markets. In this financial structure, growth-oriented companies in Europe and China still face challenges in securing funding for expansion. Therefore, enhancing the capabilities of capital markets, increasing the proportion of equity capital, and accelerating the development of venture capital are crucial for promoting healthy economic growth.
Yin Zhongli, a researcher at the Financial Research Institute of the Chinese Academy of Social Sciences, emphasized that disruptive innovation drives economic growth. However, traditional credit and fiscal funding often fall short in supporting small and micro enterprises that spearhead these innovations. The involvement of venture capital or equity investment can effectively aid these companies in achieving technological conversion. The capital market serves as a cradle for disruptive innovation, providing a unique risk diversification mechanism that can mitigate the risks and costs of developing new technologies. Moreover, the capital market can encourage innovation-driven companies to enhance their research and development efforts through valuation pricing, talent incentives, and mergers and acquisitions.
Mao Hansong, President of the China Securities Finance Corporation, pointed out that the development of new productive forces is a crucial requirement and focal point for promoting high-quality growth. Capital markets play significant roles by sharing innovation risks, facilitating the formation of innovative capital, and optimizing resource allocation. High-quality enterprises that represent the direction of new productive forces can also infuse fresh vitality into the capital market.
When asked how to effectively drive the development of new productive forces, Shan Junbao, Chairman of CICC Capital, stated that their investment strategies are focused on two key areas. First, they aim for forward-looking and diversified investments in future industries, emphasizing early, small, and technology-oriented investments through fund-of-fund vehicles that cater to the intersection of technology and finance. Second, they seek to strengthen strategic emerging industries through private equity investments. CICC Capital is committed to exploring best practices for supporting the development of new productive forces through private equity, focusing on all stages from fund raising to investing, managing, and exiting.
Charles Li, CEO of Hong Kong Exchanges and Clearing Limited, highlighted that the defining characteristic of new productive forces is innovation, encompassing advancements in technology, production methods, and management models. Stock exchanges are a core component of the capital market, providing direct financing services for various innovations. In recent years, the Hong Kong Stock Exchange has made substantial efforts to promote innovation and the development of new productive forces by reforming its listing systems and enhancing market liquidity. New rules, such as the recent additions of chapters 18B and 18C, are designed to create more pathways for potential innovative companies to go public. Looking ahead, the exchange will continue to expand and optimize connectivity mechanisms, drive multiple market reforms, and foster innovative products and services to support the development of new productive forces.
Fiona Cincotta, CEO of FTSE Russell, remarked on the critical role that indices play in supporting the development of the real economy. In recent years, China has actively implemented financial opening measures, including the removal of foreign ownership limits in banking, financial asset management, and insurance industries. This reflects the deepening connection between China’s financial market and the global economy. FTSE Russell hopes to collaborate with regulators, exchanges, and market participants to develop index products that reflect the unique characteristics of the Chinese market. Through such collaboration, they aim to build a more effective, resilient, and inclusive financial system that benefits a wider range of investors.
