Guosen Securities: Reform, innovation, and global integration will drive the development of China's capital market
Stronger investor protection, more long-term institutional investment, and greater financing support for technology companies will help to enhance market resilience and achieve sustainable growth.
Shenzhen, China, October 27, 2026 / PRNewswire / -- Guosen Securities Co., Ltd., one of China's leading securities companies and investment banks, stated that it expects ongoing regulatory reforms, technological innovations, increased participation from long-term institutional investors, and greater access to international markets to reshape China's capital market. The company believes that these developments will accelerate the market's shift from a focus on scale expansion and financing volume to a greater emphasis on market efficiency, investment returns, and long-term sustainability.
Guosen Securities believes that the effectiveness of the capital market should not be judged solely by market performance and financing activities, but also by its ability to channel investment towards innovation and to build sustained investor confidence. As China enters the 14th Five-Year Plan period (2026-2030), these changes are expected to enhance market resilience, improve capital allocation, and support broader economic development in China.
Strengthen market discipline and investor confidence
In the view of Guosen Securities, stricter regulation does not necessarily come at the cost of market vitality. Effective law enforcement can enhance investor confidence by improving market integrity and promoting more efficient capital allocation.
Strengthening the crackdown on financial reporting fraud, insider trading, and market manipulation, as well as more effectively implementing delisting procedures for companies that no longer meet listing requirements, will help to direct investments towards enterprises with good governance, sustainable operations, and clear strategic directions.
At the same time, listed companies are increasing dividends and share repurchases, reflecting an increasing emphasis by the market on returning value to shareholders. This shift indicates that the capital market is moving from a focus on financing to a more balanced environment that serves both issuers and investors, thereby supporting a more stable and sustainable foundation for investment.
Support technological innovation and industrial transformation
As China shifts to new sources of economic growth, the capital market is playing an increasingly important role in financing technological innovation.
Technology companies usually face high R&D costs and long development cycles, and it is often difficult to assess their long-term potential based solely on short-term profitability. The reforms of the Science and Technology Innovation Board (STAR Market) and the GEM Board, as well as the improvement of mergers and acquisitions and corporate restructuring frameworks, are enhancing the market's ability to evaluate and manage risks associated with innovation-driven enterprises.
At present, technology stocks account for more than 30% of the total market value of A-shares. This not only reflects changes in the market structure but also indicates that capital is flowing increasingly towards industries that drive China's industrial modernization.
Through financing, price discovery, and risk sharing, the capital market is helping investors identify emerging industries and supporting the development of new productive forces.
Expand long-term institutional investment
Guosen Securities believes that the increased participation of long-term institutional investors is expected to provide additional support for market stability.
Institutional investors, including social security funds, insurance companies, and pension funds, typically have longer investment horizons and place greater emphasis on corporate governance, cash flow generation capabilities, and sustainable competitive advantages.
As these investors increase their participation, they can help to curb short-term speculative activities and encourage the market to focus more on the fundamental aspects of companies and the creation of long-term value. In turn, this can enhance the capital market's ability to provide sustained financing for corporate growth.
Expand international access and cross-border investment
Guosen Securities emphasizes that greater access to the international market not only means attracting foreign investment but also requires closer coordination in market practices, regulatory frameworks, and investment opportunities across borders.
China's vast industrial base, broad domestic market, and continuously expanding opportunities for technological innovation continue to support the investment attractiveness of Chinese assets.
As of the end of July 2026, the number of approved investors under China's Qualified Foreign Institutional Investors (QFII) program has approached 1,000, with nearly 70 new additions throughout the year. By the end of 2025, foreign investors will hold over $1 trillion in Chinese domestic stocks and bonds.
China's long-term growth prospects, ongoing industrial modernization, and policy continuity are expected to continue to support the interest of international investors and create more opportunities for cross-border investment.
Build a more resilient and sustainable capital market
Guosen Securities believes that regulatory reforms, technological innovations, and greater international integration are expected to reinforce each other throughout the continuous development of China's capital market. Together, these factors are expected to improve capital allocation, expand financing for innovative enterprises, support more sustainable investment returns, and enhance the contribution of the capital market to China's long-term economic growth.
