The People’s Bank of China is considering allowing foreign companies to issue shares on the mainland as part of its drive to reform the convertibility of the yuan and open up China’s capital market. Beijing will press ahead with reforms to allow individuals to invest in overseas capital markets directly, according to the central bank’s 2015 annual report released on Tuesday. It came as state media reported details of Premier Li Keqiang’s meeting on Monday with senior officials overseeing the mainland’s financial system. Li called on regulators to stay vigilant towards risks in financial markets and abnormal cross-border capital flows. Li told regulators to keep credit growth “reasonable” and to differentiate policies to help sectors and regions in difficulties. He reiterated the need to coordinate a prudent monetary policy with a proactive fiscal policy. China’s capital account opening is on ‘a stable path’: economist Beijing hopes introducing foreign companies to the mainland’s capital market will give more options to choice-starved investors and shore up the corporate governance of domestic listed firms. Without specifying a time frame, the central bank said “in future” it would allow qualified foreign companies to issue shares on the mainland, including Chinese depositary receipts, or CDRs. These are certificates issued by Chinese banks that represent a pool of foreign equity traded on Chinese exchanges. CDRs are similar to American depositary receipts, which have been widely used by Chinese companies to issue shares in the US market. China would launch the qualified domestic individual investor scheme, known as QDII2, at a “proper time” to facilitate financial investment by individuals in overseas markets, the central bank said in highlighting its key tasks in making the yuan fully convertible under the capital account. The scheme is an upgrade of the qualified domestic institutional investor, or QDII, programme launched a decade ago that allowed individual investors access to overseas markets through certain fund management institutions and banks. Brexit, Fed, negative rates may slow opening up of China’s financial markets to foreign investors, says nation’s interbank market chief Expectations are already high that the QDII2 scheme will be launched in the Shanghai free-trade zone, a testing ground for China’s market deregulation. [China] needs to attract long-term institutional capital into its capital market Liu Jian, researcher, Bank of Communications Observers said there could be real progress on the much-hyped measures as the central bank would have thought carefully before announcing such steps. “As the panic of a one-way yuan depreciation wanes and financial markets stabilise, China may be more assured to push forward capital account reforms such as the QDII2 programme,” said Liu Jian, a senior researcher with the Bank of Communications. “It also needs to attract long-term institutional capital into its capital market.” The central bank expected inflation to accelerate “mildly” and said the mainland economy as a whole still faced relatively significant downward pressure. However, growth was “very likely” to be within a reasonable range. It said it would stick to a “prudent” monetary policy and pledged to offer financial support when China pushed forward plans to retire excess capacity, cut leverage, and reduce inventories.