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Recently, in order to review and promote the achievements of economic development during the 14th Five-Year Plan, the stock market was included as a chapter in this context. Objectively speaking, there have been certain improvements in the stock market over the past five years, but it is also important to soberly recognize the issues within it. Here are several data points that require careful comparison:
1. Regarding the total market capitalization exceeding 100 trillion yuan. This achievement is not particularly high. If governance were improved, the balance of investment and financing more effectively ensured, the overall growth potential of listed companies was released without the interference of substandard IPOs, and the market had stronger predictability, the market capitalization of 100 trillion yuan would have been surpassed a long time ago and could sustain stable growth. Poor IPO practices and a severe imbalance between supply and demand have harmed the growth potential of China's stock market, leading to a decrease in market capitalization. Not only have ordinary investors suffered losses, but many institutional investors have also faced significant losses, underscoring a profound lesson.
2. Regarding the management scale of public funds surpassing 36 trillion yuan. This figure, as of late August this year, looks impressive, but in reality, not all this capital has flowed into the stock market. As of June 30 this year, the value of stocks held by public funds was only 7.2 trillion yuan, with nearly 30 trillion yuan directed towards money market funds, bond funds, and others.
Stock ETFs serve as an important indirect holding channel for institutional investors like public funds. As of the first half of 2025, the total value of stock ETFs amounted to 3.03 trillion yuan, with institutional investors holding assets worth 2.34 trillion yuan, which accounts for 77%. Central Huijin Investment and its wholly-owned subsidiary Central Huijin Asset Management have holdings totaling 1.28 trillion yuan, representing 42% of the total.
3. Regarding various medium- and long-term funds holding approximately 21.4 trillion yuan of A-share market capitalization, marking a 32% growth since the end of the 13th Five-Year Plan. This data is also from late August this year. In comparison to the end of 2020, which institutions have increased their holdings? At the end of 2020, public funds held A-shares worth about 5.08 trillion yuan, while insurance funds and social security funds approached 2 trillion yuan in holdings. By June 30, 2025, public funds' holdings increased to 7.2 trillion yuan, insurance funds reached 4.8 trillion yuan, and social security funds' holdings were 186.2 billion yuan. Other medium- and long-term funds contributing to this include pension funds, annuities, bank wealth management products, and Central Huijin and its subsidiaries. Among the 100 trillion yuan market capitalization, medium- and long-term funds account for 21%, which shows some progress, but the gap remains significant.
4. Regarding the total amount of "red packets" distributed by listed companies through dividends and buybacks, totaling 10.6 trillion yuan as of the end of 2024. This figure may not seem small, but firstly, the number of listed companies has increased from 4,100 at the end of 2020 to 5,392 by 2024, marking a 32% increase, which should logically reflect an increase in the number of companies declaring dividends. Secondly, new listed companies generally have abundant cash and tend to distribute dividends, especially when large shareholders hold significant stakes, making such dividends beneficial for them to regain funds. Hence, the nuances of cash dividends are known only to the shareholders themselves.
Regarding the repurchased shares, a portion is used for equity incentives, and the rate of canceled shares remains low. Balancing the relationship between dividends and major shareholders cashing out is another prominent issue within China's stock market.
5. Regarding the annualized volatility of the Shanghai Composite Index at 15.9%. This is the weighted average over the past five years. Reducing volatility in Chinese stock indices has indeed been an important issue in regulating the market, as excessively high volatility signifies over-speculation, which is detrimental to stable market development. However, the relatively low volatility of the Chinese stock market over the past five years has a unique backdrop—an oversupply of stocks and limited entry of medium- and long-term funds have suppressed the momentum for index growth, consolidating it around the 3,200-point level, influenced by various factors, and allowing for excessive declines. Thus, the Chinese stock market index has been "bounded" in a trading range for the past five years. Whether this should be considered a performance achievement is highly questionable.
When we examine the U.S. markets, which have historically taken pride in low volatility, we see that the annualized volatility of the three major indices over the past five years has been 14.86% for the Dow Jones, 17.14% for the S&P 500, and 22.87% for the Nasdaq. The volatility of the Shanghai Composite Index indeed presents a complicated picture.
Analyzing the underlying factors and real logic behind these five data points helps us comprehensively assess the path taken over the past five years and scientifically view the gains and losses as well as the successes and failures. In my view, the establishment of the STAR board and the implementation of a registration system, the legal crackdown on various unlawful practices, the advocacy for listed companies to enhance value, the facilitation of medium- and long-term funds entering the market, and the prevention of malicious cash-outs are the primary achievements of the past five years, rather than the data mentioned above.
Our significant loss has been the insufficient regulation by authorities, and the weakening of public scrutiny has led to some regulators abusing their power, leading to deception and confusion that disrupt the market ecology and undermine public confidence. We have paid dearly for this, making it challenging to fully recover from the losses in the short term. Fortunately, the Party Central Committee has taken decisive measures, and the series of initiatives known as the "New National Nine Articles" have helped restore order in the stock market, gradually repairing the market ecology and restoring investor trust. We must learn profound lessons and strictly punish unlawful individuals, including those in regulatory departments, uphold the dignity of the rule of law, and ensure robust development of the Chinese stock market that aligns with high-quality economic growth, establishing a virtuous cycle between the stock market and the real economy!