Capital markets support agricultural M&A and restructuring to serve the development of agriculture, rural areas and farmers

Jiang Yang, vice chairman of the China Securities Regulatory Commission, recently said at the “China Rural Finance Development Forum” that the CSRC will start from four areas - stepping up market efforts to serve “agriculture, rural areas and farmers,” continuously increasing the supply of financial services suited to the characteristics of “agriculture, rural areas and farmers,” promoting innovation-driven development of the agricultural industry, and raising the level of futures market services for “agriculture, rural areas and farmers” - to comprehensively strengthen the connection between the capital market and modern agriculture.

Jiang Yang pointed out that China is a major agricultural country, and when agriculture thrives, the country is strong. Under the new normal of economic development, the effective resolution of the “agriculture, rural areas and farmers” issue will further enhance the potential, resilience and room for maneuver of economic development. Rural financial reform and innovation must be accelerated to better give play to the role of finance in boosting agriculture.

⟦NL> He said that promoting the organic combination of the capital market and “agriculture, rural areas and farmers” is an important task in improving the rural financial system. The capital market, which occupies a fundamental position in the factor market, should step up efforts to serve “agriculture, rural areas and farmers,” promote the rational flow of urban and rural factors, and help the development of agricultural modernization.

It is reported that next the CSRC will comprehensively strengthen the connection between the capital market and modern agriculture and focus on doing four areas of work well.

First, further step up efforts by the capital market to serve “agriculture, rural areas and farmers.” Continue to improve the multi-tiered capital market system, effectively broaden the fields and scope of capital market services, and meet the diversified financing needs of agricultural enterprises at different levels of development and stages; in particular, support the standardized development of regional equity markets, encourage securities companies to base themselves locally and work intensively, and actively provide personalized and specialized services for small and micro enterprises including agricultural enterprises. Continue to support leading agricultural enterprises and large specialized companies in integrating upstream and downstream industry chains through M&A, restructuring and other means, further enhancing the radiating capacity of leading enterprises and raising the level of industrialized agricultural operations.

Second, continuously increase the supply of financial services suited to the characteristics of “agriculture, rural areas and farmers.” Promote securities, fund and other operating institutions to actively develop agriculture-friendly and beneficial-to-farmers products (000061, Stock Bar), and while further broadening financing channels for agriculture-related enterprises, effectively meet farmers' diversified wealth management needs. Support futures operating institutions in improving their endogenous development mechanisms, advancing product reconstruction and business innovation, and providing small and medium-sized agricultural enterprises with comprehensive services such as cooperative hedging, pricing services and warehouse receipt services, so as to improve risk management capabilities and promote sound operations. Support the development of agricultural industry investment funds, agricultural private equity investment funds and agricultural science and technology venture capital funds, further revitalize and retain existing rural funds, attract external incremental funds such as those from cities, and introduce a source of living water for the development of “agriculture, rural areas and farmers.”

Third, promote innovation-driven development of the agricultural industry. Give full play to the advantages of effective connection between scientific and technological innovation and the capital market, further strengthen market infrastructure, improve institutional arrangements conducive to agricultural innovation and development, and, by standardizing and developing equity crowdfunding financing business, enriching bond financing varieties for small and medium-sized enterprises and supporting small and medium-sized enterprises in issuing preferred shares, guide various types of capital in an orderly manner into high-quality agricultural projects, promote the comprehensive connection of science and technology, creativity, capital and agriculture, and actively support the growth and expansion of agricultural enterprises with high technology and new business models and new economic formats.

Fourth, raise the quality and level of futures market services for “agriculture, rural areas and farmers.” Further improve the listing mechanism for futures and options varieties and raise the innovation efficiency of the agricultural product market. Give greater prominence to refining and deepening listed varieties, adjust the contract rule system dynamically in a timely manner, and effectively raise the pricing and risk management efficiency of the agricultural product futures market. Study and launch more agriculture-related futures varieties to further broaden the coverage of services for agricultural industry clients.

Jiang Yang said that agricultural product futures and options are tools that are mature and widely used in overseas markets, and China should, in light of its actual conditions, do a good job in piloting agricultural product futures and options, actively give play to the advantages of options tools such as high efficiency in the use of funds, flexible and convenient hedging strategies and precise risk management, and form an agricultural product risk management system coordinated and complementary with tools such as forwards and futures, so as to better serve the reform of the target price of agricultural products.

In addition, Jiang Yang introduced that the CSRC has always attached great importance to the capital market's service work for agriculture and rural areas, launched a series of targeted reform measures, and achieved remarkable results.

Statistics show that from 2007 to the end of March this year, a total of 38 leading agricultural industrialization enterprises made IPOs, raising 28.7 billion yuan; listed agricultural enterprises refinanced 21.7 billion yuan. As of the end of March, a total of 57 agriculture-related enterprises issued small and medium-sized enterprise private placement bonds in the exchange market, raising 9.5 billion yuan. From 2009 to the end of March this year, there were a total of 17 major asset restructurings of agriculture-related listed companies, with a cumulative amount of 31.6 billion yuan.

At present, China's futures market has listed 21 agricultural product futures varieties, and a variety system covering grain, cotton, oil and sugar has basically taken shape.