China will encourage listed companies to conduct mergers and acquisitions, buy back shares when prices are low and pay higher cash dividends as the government extends efforts to boost share prices.

The steps are aimed at increasing the investment value of listed companies and promoting stable and healthy growth of capital markets, the China Securities Regulatory Commission said in a statement posted on its Website on Monday.

“Regulatory departments stepped onto the only right path, that is to increase the return for investors,” Li Daxiao, an economist at Yingda Securities, said in a Weibo post after the statement. “This is a very correct direction!” he said.

China revived its intervention in equities on Aug. 27 after a halt earlier in the week contributed to the biggest two-day selloff since 1996. Policy makers are trying to bolster shares through a mix of market intervention and a crackdown on alleged manipulation before President Xi Jinping oversees a World War II victory parade on Thursday.

The CSRC on Saturday asked brokerages to step up their support for share prices by contributing 100 billion yuan ($15.7 billion) to the nation’s market rescue fund and increasing stock buybacks, according to people familiar with the matter.

The Shanghai Composite Index dropped 0.8 percent on Monday to close at 3,205.9, capping the benchmark index’s biggest two-month tumble since 2008, amid concern that government intervention to prop up the market will fail.

Buy Backs

The government will support companies to sell preferred shares and bonds to raise money to buy back shares when the relative level of stock prices to assets or earnings falls to less than the industry average by an unspecified “pre-set extent,” according to the CSRC statement on Monday. Changes came into effect on Aug. 31, the regulator said.

State-owned parents of public companies should help fund such efforts, and are also urged to rely on capital markets to consolidate resources, improve industrial structure and enhance the quality and efficiency of development.

Companies that meet the requirements to pay cash dividends should do so, and they are encouraged to make midyear payouts, according to the statement.

Listed companies will receive regulatory and financial support to merge and purchase companies, and overseas deals will be supported with M&A loans and syndicated loans, according to the statement.