China increases capital market access for foreign institutions
Feb 01, 2019 (China Knowledge) - Yesterday, China further increased foreign institutions’ access to its capital markets by combining its two inbound investment schemes while also broadening their scope of investment to also include derivatives, bond repurchases and private funds.
Under the new draft rules published by the China Securities Regulatory Commission (CSRC), the Qualified Foreign Institutional Investor (QFII) and the yuan-denominated RMB Qualified Foreign Institutional Investor (RQFII) schemes will be combined with the threshold for overseas applicants lowered and the vetting process simplified.
The new rules aim to further open China’s capital markets and introduce more long-term overseas capital to the country as it continues to battle with a slowing economy.
Currently, these qualified foreign investors are only allowed to purchase Chinese stocks and bonds under the existing schemes. The new rules now allow them to buy securities on China’s main over-the-counter equity market, the New Third Board and also invest in private funds and bond repurchases.
Furthermore, these institutions will also be able to access derivatives such as financial futures, commodity futures and options with the new rules.
The CSRC has also said that it will improve the mechanism for margin trading and short-selling to meet the diversified investment needs of foreign investors with the Shanghai and Shenzhen stock exchanges currently studying the possibility of expanding the number of securities eligible for margin trading and short-selling.
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