(Yicai) Jan. 24 -- The Chinese mainland’s two key stock markets walked back losses after the vice chairman of the securities regulator said the watchdog will double down on ensuring investment returns.

The Shanghai Composite Index reversed a 1 percent drop to close up 1.8 percent at 2,821 today, after hitting a four-year low yesterday, while the Shenzhen Component Index ended up 1 percent at 8,682, reversing a more than 2 percent decline earlier. The gauge slid to its lowest in five years yesterday.

The China Securities Regulatory Commission will focus on protecting the rights and interests of small and mid-sized investors while reminding listed companies about the required rate of return, Wang Jianjun said in comments in answer to questions from journalists that were released in a statement during trading hours.

The State Council, the country’s cabinet, recently held an executive meeting to issue new capital market policies and the CSRC is working against the clock to implement these, Wang also said.

The CSRC will improve its standards to assess the quality of listed firms, Wang said, adding that it will stress return on investment so that businesses will generate better returns for investors by repurchasing and canceling shares, or handing out higher dividends.

The regulator will support publicly traded companies in their efforts to bring in high-quality assets and to conduct market-oriented mergers and acquisitions. It will refine the delisting mechanism on a regular basis and speed up the elimination firms involved in serious legal and regulatory breaches and with no investment value, he added. 

The CSRC will optimize its mechanism for evaluating initial public offering sponsors to focus on the quality of their work when assessing IPO-hopefuls and future returns, Wang said.

The watchdog will comprehensively assess the IPO pricing and inquiry mechanisms to support greater investor participation and will improve the regime for quantitative trading based on national and city-level conditions, he said. Moreover, it will optimize its rules for shareholders who want to unload stock, as well as those about margin trading, and refinancing, he added.

The CSRC will crack down on illegal behavior such as rule-breaking issuances that harm investor interests, while holding the responsible entities accountable, Wang noted. 

Xie Xiaobing, head of the property rights management bureau at the State-owned Assets Supervision and Administration Commission, also said today that the SASAC will further study how to incentivize the heads of companies owned by the central government by linking up personal key performance indicators and their share price performance.

That would signal confidence and steady market expectations, Xie said, adding that SOE chiefs could hike stock holdings, launch share buybacks, and increase cash dividends to better returns for investors.

Editor: Emmi Laine