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Chinese regulators promised to speed up the opening of their capital markets and deepen reforms to attract more foreign investors.
The regulator will expand the scope of investments allowed in the link of the Hong Kong stock connection program and allow foreign investors to trade more commodity futures products, said Vice Chairman of the China Securities Regulatory Commission Fang Xinghai , at the 2020 China International Financial Annual Forum on Sunday in Beijing.
Officials are planning to announce the revised rules on qualified foreign institutional investors as soon as possible to increase their “willingness and confidence” to invest in China, he said. Foreigners currently own just 4.7% of outstanding Chinese shares, well below the more than 30% in markets such as Japan and South Korea, he said.
“There is still huge potential” to generate foreign capital, Fang said.
China is also opening up its financial markets this year to allow Wall Street giants such as Goldman Sachs Group Inc. to take full ownership of companies in the country, counting on them to provide new investment and foster a more competitive local industry.
The move comes in a context of growing tension with the US over issues such as trade and the repression of Hong Kong. Weighed down by the virus outbreak, China’s economy is poised for its slowest expansion this year in four decades.
The participation of foreign investors has helped make the Chinese stock market “more rational” and valuations “more reasonable,” Fang said. The long bear market sessions and short bull runs that have plagued China for a long time are “disappearing,” he said.
China lifted the upper limit on quotas for foreign investors to buy stocks and bonds last year, after also easing the rules in 2018. The country is pushing to increase the use of the yuan in international transactions, while attracting more capital. Foreign.
Eugene Qian, president of the local securities firm of UBS Group AG, told the forum that a “more flexible and open” regulatory environment is needed, and asked regulators to also facilitate micro-regulation such as that of individual products and subsidiaries of financial companies. . That would allow companies to use self-discipline and develop new products without fear of regulatory punishment, he said.
The attractiveness of yuan-denominated financial assets to international investors has increased as more central banks use the Chinese currency in their foreign reserves, Chen Yulu, deputy governor of the People’s Bank of China, said at the forum. Foreign holdings of such domestic assets increased 37% to 7.7 trillion yuan ($ 1.1 trillion) as of July 31 from a year earlier, it said.
The yuan may take on “greater international responsibilities” in the future as China’s openness deepens, he said.
– With the help of Sharon Chen and Dingmin Zhang
(Add a comment from UBS in the ninth paragraph.)
