The State Council, China's cabinet, vowed to overhaul domestic capital markets, announcing that it will encourage more state-owned enterprises (SOEs) to list. In addition, it plans to loosen restrictions on the purchase of shares by insurers.
The benchmark Shanghai composite index, which has failed to perform as well as most of its Asian neighbors, rose to its highest level in almost 18 months in response to the news. The announcement in national media was the first time that supporting capital markets has been stated as a government policy. It comes on the heels of the State Council's banking reforms announced in January.
China's opaque capital markets and debt-addled banking sector are widely considered to be the most significant institutional impediments to economic growth.