Opportunities emerging for investors eyeing mid- to long-term returns

The latest measures by policymakers to shore up economic growth and to push further reform and opening of the capital market will help boost investor sentiment and offer solid support to the A-share market, analysts said on Wednesday.

The Chinese stock market has been suppressed by market concerns about slower economic growth and uncertainties surrounding China-US trade frictions.

But opportunities are emerging for investors who are eyeing mid-to long-term returns, analysts said, as policymakers have acted swiftly with targeted measures to stabilize growth and push for high-quality development, now a top priority of the central leadership.

The benchmark Shanghai Composite Index declined by 0.78 percent to close on Wednesday at 2911.05 points. On an intraday basis, the last time the index traded above 3000 points was on Nov 5.

The startup ChiNext index in Shenzhen also retreated by 0.54 percent after surging by 2.77 percent in the previous session.

"While some investors are still concerned about slower economic growth and external risks, buying opportunities are emerging for those who are planning for long-term equity allocation," Wang Jianhui, an analyst at Capital Securities, said in a research note.

The People's Bank of China, the central bank, has lowered interest rates and pledged to step up the counter-cyclical policy adjustment to boost economic growth. The one-year loan prime rate came in at 4.15 percent on Wednesday, down from 4.2 percent a month earlier. The above-five-year LPR stood at 4.8 percent, slightly under the 4.85 percent seen last month.

"The central bank has sent a clear signal about its intention to stabilize growth with monetary easing. This will help stabilize market expectations and boost investors' sentiment," analysts at Guoxin Securities wrote in a separate research note.

China's top securities regulator has also vowed to deepen capital market reform to improve the quality of the listed companies and give foreign investors bigger market access.

The regulator will also accelerate the launch of the pilot registration-based system for new share sales on the ChiNext board to encourage more technology companies to raise funds in the stock market.

Dong Dengxin, director of the Finance and Securities Institute at Wuhan University of Science and Technology, said that improving fundamentals institutions of the capital market is a crucial precondition and a key guarantee for its healthy development and achieving high-quality economic growth.

That would be in line with the goals laid out by the recently concluded fourth plenary session of the 19th Central Committee of the Communist Party of China.

Dong said that investor confidence is on the rise amid stepped-up efforts to push for high-quality growth and refine the fundamental market system. The market vitality unleashed by further opening of the capital market "should not be underestimated".

"The market just lacks a trigger (to start a sustainable recovery)," he said, adding that rising economic downside pressure this year has weighed on the A-share market but the pressure is likely to ease next year.

Looking ahead, ongoing market reforms including the expansion of the registration-based share sales system and strengthening supervision on information disclosure are expected to gather speed, which will in turn help boost the A-share market, he added.