THE country’s securities regulator will encourage share buybacks and mergers and acquisitions by listed firms, it said in a statement yesterday responding to market concerns about recent sharp moves in markets.

The China Securities Regulatory Commission (CSRC) also said it will enhance market liquidity, reduce unnecessary interference in trading, and create a level playing ground for investors. It added it would guide more long-term capital into the markets.

Companies can repurchase shares with approval from at least two-thirds of the board if deemed necessary to protect shareholders’ interests, or to fund convertible bond exchanges, according to revised rules by the National People’s Congress.

Firms were previously only allowed to buy back shares for more limited purposes including stock incentives, and had to get shareholder approval.

Many are already jumping in. Real-estate company Xinhu Zhongbao Co. and Meisheng Cultural & Creative Corp. briefly soared Monday after saying late Sunday they will repurchase shares.

The new rules allow companies to react much faster during market corrections, China Galaxy Securities Co. said, adding that long processing times made it much less common for firms to conduct buybacks compared with those in overseas.

The Shanghai Composite Index has fallen more than 22 percent this year and is in line for its worst annual performance in a decade. That’s prompted the government to announce measures to restore confidence, promising support for the private sector and easing share-pledging risks.

The swiftness of pushing the buyback policy through reflects China’s determination to rescue the market, Hao Hong, chief strategist at Bocom International Holdings Co., wrote in a note. It is unclear whether changes to share repurchase rules will be effective, as net cash that can be used for buybacks is limited, he said.

At least 41 listed companies have announced new share buyback proposals, changes to existing plans or progress on previous plans, the Securities Times said, quoting its own calculations. The total amount to be spent is as much as 16.8 billion yuan (US$2.42 billion), the report said.(SD-Agencies)