China's A-share market. Photo: AFP
The capital market plays an important role in resources allocation, asset pricing and mitigating risks. Photo: AFP

A number of local securities brokers are exploring the possibility of launching a “rescue-like” fund with local state-owned enterprises in hopes of helping listed companies to survive the recent instability in the stock market, China Securities Journal reported.

According to an insider at a securities brokerage, if such a bailout fund is launched, it will not only help solve the dilemma of listed companies’ stock pledge risks and liquidity issues, but also promote the value and development of listed firms.

Pan Xiangdong, the chief economist of New Era Securities, suggested that special policies could be considered to defuse potential crises and avoid systemic financial risks.

For special policies, Pan referred to the bailout of policy-oriented financial institutions.

For example, to allow controlling shareholders to issue additional preferred stocks to designated financial institutions, to help mitigate the credit crisis caused by the risk of short-term collateral and stem the market slump through an external force.