China looks to open its markets further to lure more foreign capital via its Hong Kong-based «Stock Connect» programs.
New rules will be rolling out to expand the scope of market access by foreign investors to include more commodities futures products, according to China Securities and Regulatory Commission (CSRC) vice-chairman Fang Xinghai, during a financial forum on Sunday.
The revised rules will be announced as soon as possible to increases foreign «willingness and confidence» to invest in China, Fang added at the «China International Fair for Trade in Services».
Foreign Capital Campaign
Currently, foreign ownership of public mainland securities remains limited at around 4.7 percent despite continuous efforts to ease access. Last year, authorities fully removed the quota cap for foreign investors seeking to buy mainland stocks and bonds.
Fang’s sentiments about limited foreign ownership echo recent efforts by top officials in Beijing to lure more capital abroad. He noted the sub-5 percent foreign ownership level, a figure that originates from a report co-authored by Fang’s boss, CSRC chairman Xiao Gang.
«Why is the [foreign] proportion [of Chinese securities ownership] not high? Is our infrastructure – such as the payments, settlement, regulation and legal system – suitable for a more international market? This is what we should consider,» said Lu Lei, deputy head of the State Administration of Foreign Exchange (SAFE), at a separate forum.
Improved Market Efficiency
Capital aside, Fang also noted that foreign investments have come with the benefit of enhancing mainland market efficiency which he believes has reduced the long bear market sessions and short bull runs.
The participation of foreign investors has helped make Chinese markets «more rational» and valuations «more reasonable,» Fang said.
