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More market opening-up to attract foreign players

By SHI JING in Shanghai and ZHOU LANXU in Beijing | China Daily | Updated: 2021-09-09 07:44
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Experts say further reform and opening-up can be expected in the Chinese capital market, and foreign investors may find it attractive. [Photo/IC]

Experts said further reform and opening-up can be expected in the Chinese capital market, and foreign investors may find it attractive, as Yi Huiman, chairman of the China Securities Regulatory Commission, has stressed that opening-up and cooperation are the inevitable trend in the integrated development of global markets.

Yi, head of China's top securities regulator, made the comments on Monday during the annual meeting of the World Federation of Exchanges. He also said the CSRC is working on measures to expand the scope of the stock connect program linking the Chinese mainland and Hong Kong.

The Shanghai-London stock connect program will be improved as well, while more commodity and financial futures will be made available to foreign investors. The recognition of international practitioners' qualification will be advanced, Yi said.

"We will provide more equitable, efficient and convenient services for overseas institutions and investors to participate in China's capital market," he said.

Meng Lei, an A-share strategist at UBS Securities, said the recent policy signals indicating capital market opening-up, including the A-share futures product to be launched in Hong Kong, have reassured global investors after market fluctuations.

This is expected to help A shares attract net foreign inflows of more than 100 billion yuan ($15.49 billion) over the next four to five months. The manufacturing sector, which is backed by policy supports, and consumption stocks, whose valuations have become more reasonable, are likely to figure among the chief attractions for global investors, Meng said.

While some views emerged in late July that foreign investors may withdraw part of their capital from the A-share market, the market's performance in August has proven such fears were unfounded. At least 20 billion yuan worth of foreign capital flowed into the A-share market in August, UBS said.

Yi said the commission is striving for greater progress in international regulatory cooperation regarding the supervision of overseas-listed Chinese companies, cross-border audit oversight and the enforcement of laws and regulations.

Global financial hubs "should not become platforms and tools for governments to suppress and sanction other countries", Yi said, adding any "zero-sum game" mindset should be shed, as global financial communities have become intertwined with common interests.

Meanwhile, the commission will utilize the upcoming launch of the Beijing stock exchange as an opportunity to build a comprehensive set of arrangements to support small and medium-sized enterprises, Yi said.

The CSRC will remain vigilant against any risks of asset bubbles created by the circulation of liquidity within the financial system diverting funds from the real economy.

Mark Wang, president and CEO of HSBC China, said the country's accelerated implementation of various measures to promote the reform and opening-up of the financial industry in recent years, has provided support for China's resilient economic growth and presents great opportunities for international financial institutions and global investors.

"With the continuous deepening of China's financial reform and innovation and the continuous optimization and improvement of the business environment, China will become a more open and dynamic economy, with even wider space for international financial institutions to develop and grow in this market," he said.

Sean Taylor, Asia-Pacific chief investment officer with German asset management company DWS, said Yi's remarks demonstrate China is committed to continuing capital market reform and opening-up. "I think the Chinese government will make the A-share market more attractive and better regulated. That would be more interesting for foreign investors."

China's financial assets offer valuable diversification benefits for global investors. Next year, global economic growth may slow slightly as developed economies scale down stimulus measures, but China is expected to ease macro policy and provide global investors with attractive growth opportunities, Taylor said.

On the fixed-income front, the improved market connectivity via the bond connect program will likely draw in more capital into Chinese onshore bonds, he said.

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