Original title: Chen Fei, Director of the Bond Department of the China Securities Regulatory Commission, said at the 2021 Infrastructure REITs Industry Development Conference that he will continue to improve the REITs supporting policies and continue to increase the number of pilot projects
On October 15, at the 2021 Infrastructure REITs Industry Development Conference, Chen Fei, Director of the Bond Department of the China Securities Regulatory Commission, said that the China Securities Regulatory Commission will continue to improve supporting systems and regulatory mechanisms and continue to increase pilot projects.
Chen Fei said that under the current background of building a new development pattern, the core of enhancing the hub function of the capital market is to guide all kinds of factor resources to gather in more efficient and dynamic areas and stimulate the inherent potential of economic growth. At present, China’s infrastructure investment is facing practical difficulties such as long-term funding shortages. At the same time, long-term funding has a demand for investment products that take into account soundness, safety, and medium returns. Relying on publicly offered REITs to integrate the mature real estate formed by infrastructure investment into the market-oriented resource allocation system in accordance with the pricing and rules of the capital market will become an effective way to smooth the internal circulation of the economy and guide capital and capital investment.
The data shows that the first batch of 9 publicly offered REITs products have risen 11.37% on average since their listing, with an average daily turnover of 161 million yuan and an average daily turnover rate of 1.51%. The overall market performance is in line with expectations, reflecting REITs as a medium-income, medium-risk financial Tool features. Practical testing also eliminated all parties’ concerns about possible fund discounts and large fluctuations in REITs at the beginning of the pilot.
Chen Fei said that overall, the pilot work of publicly offered REITs started well and achieved a steady start, but the successful implementation of the first batch of pilot projects only initially solved the problem of getting through publicly offered REITs from scratch. The China Securities Regulatory Commission will adhere to goal-oriented and problem-oriented, timely summary of pilot experience, continue to optimize and improve institutional and institutional arrangements, continue to increase project pilots, and effectively increase the depth and breadth of the market, and promote the stability and long-term development of the REITs market.
Specifically, it includes three aspects: improving institutional and institutional arrangements, strengthening supporting policies for public REITs, and advancing special legislation based on the long-term perspective.
In terms of improving the institutional and institutional arrangements, Chen Fei mentioned four requirements: First, optimize the project recommendation and review procedures. The second is to improve the mechanism of inquiry sale and secondary market transaction. The third is to improve the continuous supervision mechanism of REITs and increase the transparency of information disclosure. The fourth is to clarify the institutional arrangements for fundraising expansion to promote industry integration and mergers and acquisitions.
Regarding the strengthening of supporting policies for publicly offered REITs, Chen Fei said that it will give full play to the good communication and coordination mechanism with finance, taxation, state-owned assets and other departments, promote the introduction of infrastructure REITs tax policy, and stimulate market vitality; actively cultivate diversified investor groups and promote Clarify relevant policy arrangements and attract institutional investors such as banks, insurance, funds, pension funds, corporate annuities, and social security funds to participate in public REITs investment.
Regarding the long-term promotion of special legislation, Chen Fei said that the current pilot model is the best solution to the “ice-breaking” of publicly-funded REITs under the current legal framework, but it also has problems such as a large number of participants and a complex governance structure. In the next step, the China Securities Regulatory Commission will continue to strengthen the research on the legal framework of public REITs, learn from mature market practices, promote special legislation, systematically build institutional arrangements that meet the characteristics of REITs, and consolidate the legal foundation.
Chen Fei said that building a good ecosystem for REITs still has a long way to go, and all parties need to work together to build and govern. First, we must give full play to the leading role of local governments and create a good policy environment. Second, straighten out the relationship between all parties and give full play to their respective advantages. Third, the improvement and development of the “small ecology” of REITs must adapt to the “big ecology” of macroeconomic development.
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