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Mandy Zuo

China must continue to take steps to attract foreign funds and investors to its stock market, according to a senior official with the industry watchdog.
Fang Xinghai, a vice-chairman of the China Securities Regulatory Commission, said the financial sector and its capital market, which are largely shielded by a closed capital account, were not connected with the rest of the world, broadcaster China Business Network reported.
“Foreign investment accounts for just 2 per cent of the total value of the A-share market … so we need to open it up further,” he was quoted as saying.
China’s central bank frees up US$100 billion in funding as trade war looms
The weighting of China’s A-shares [mainland traded stocks] within the MSCI Emerging Market Index, a global benchmark, was just 5 per cent, Fang said, adding that Beijing was trying to increase that figure to 15 or 20 per cent.
His comments came as Beijing is working hard to attract foreign banks and financial investment to counter growing capital outflow pressures.

In his speech at the Boao Forum for Asia in April, Chinese President Xi Jinping promised foreign banks, brokerage houses and insurance firms they would be allowed to hold majority stakes in joint ventures with Chinese partners. Since then, Beijing had received a lot of applications for such deals, Fang said.
China makes it easier for foreign investors to get money out, but who wants to qualify for it?
China’s stock market fell to a two-year low last week after US President Donald Trump escalated trade tensions with the threat of more tariffs on Chinese goods.
If the fall continues this week, the market could lose its status as the world’s second largest.

Fang said Beijing was trying to give foreign investors more opportunities to manage risk, through index futures and other derivatives.
“Risk management and control is the eternal theme during the process of opening up. Many developing counties have found that during the opening up of their financial markets, there was a lack of supervision, resulting in bubbles and overvaluation,” he said.
“For China, I think the most important thing in preventing financial risks is to prevent asset bubbles while remaining open [to foreign investors].”
China stocks on verge of bear market after week that saw US$514 billion drop in market cap
Meanwhile, Shanghai’s free-trade zone, which Beijing regards as a leader in market liberalisation, last week issued 25 new preferential policies for foreign financial institutions, including allowing them to establish branches and subsidiaries simultaneously, and increase their stakes in joint ventures.
Wealth management and money exchange companies, trust firms, and car and consumer finance businesses are all welcome to set up in the zone, it said.
At the same time, the Shanghai government has promised to make it easier for foreign finance professionals and their families to settle down in the city.
China pledges to open up financial markets amid threat of US trade war
At the Lujiazui financial forum earlier this month, Guo Shuqing, head of the China Banking and Insurance Regulatory Commission, said Beijing was determined to make the financial industry more accessible to foreign players.
“Some comrades are concerned that opening up … could hit China’s financial markets and is a threat to the nation’s financial safety, but such worries are unnecessary,” he said.
Foreign lenders currently accounted for just 1.3 per cent of China’s banking assets and 6 per cent of the insurance sector, Guo said.


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China economy

China’s stock market must attract more foreign investors, industry regulator says

China’s financial sector and capital market are not connected to the rest of the world, said Fang Xinghai, a vice-chairman of the China Securities Regulatory Commission. Photo: Reuters

Fang Xinghai, vice chairman of the China Securities Regulatory Commission, speaks during the Lujiazui Forum in Shanghai, China, on Thursday, June 14, 2018. China's central bank is studying policies to boost loans to smaller firms, People's Bank of China Governor Yi Gang said in a speech to the annual forum. Photographer: Qilai Shen/Bloomberg

People walk along an elevated walkway as an electronic ticker displays stock figures in Pudong's Lujiazui Financial District in Shanghai, China, on Saturday, June 2, 2018. China's banks, scrambling to adjust to the government's deleveraging campaign, are likely to add to pressures on the corporate bond market as they shed more of their massive note holdings and de-risk their balance sheets. Photographer: Qilai Shen/Bloomberg

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Financial sector, capital market not connected to rest of world, vice-chairman of China Securities Regulatory Commission says


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