During the year, the net inflow of northbound capital exceeded 100 billion yuan. Foreign financial institutions accelerated their deployment in China
Our reporter Wu Xiaolu
Recently, the China Securities Regulatory Commission's mid-year work conference proposed to firmly promote the high-level two-way opening of the capital market and strengthen supervisory cooperation. Continue to promote the opening of markets, industries and products, study the gradual unification and simplification of channels and methods for foreign investment in the domestic market, and simultaneously strengthen the supervision and risk prevention and control capacity building under open conditions.
With the advancement of the opening of the capital market, foreign financial institutions have accelerated their deployment in China, and foreign capital has continued to flow into the A-share market. Up to now, there are 6 foreign-owned securities companies and 1 foreign-owned wholly-owned futures company in China. In addition, three overseas investment management giants are queuing to apply for public offering licenses.
In terms of the market, according to statistics from Eastern Fortune Choice, as of August 7, the net inflow of northward funds into A shares during the year was 124.094 billion yuan. According to data from the State Administration of Foreign Exchange, in the second quarter of this year, the net inflow of foreign investment in domestic securities exceeded 60 billion U.S. dollars (approximately RMB 420 billion), which is at a historically high level. Market participants said that as the U.S. dollar index tends to weaken, the attractiveness of renminbi assets has increased, and further optimization of foreign investment channels will help foreign capital to further flow into the Chinese market.
Opening of the capital market continues to advance
Accelerated inflow of foreign capital into China's capital market
Since the beginning of this year, despite the turmoil of the epidemic, the opening of the capital market has further accelerated, and foreign financial institutions are also accelerating their deployment in the Chinese market.
On April 1, with the abolition of restrictions on the foreign equity ratio of securities companies, the restrictions on foreign equity ratios of futures companies, securities companies and fund management companies were fully liberalized. At present, six foreign-owned securities companies including UBS, Nomura and JPMorgan Chase have been approved. On June 18, the China Securities Regulatory Commission approved JPMorgan Chase Futures as my country's first wholly foreign-owned holding futures company.
In terms of public funds, according to the website of the China Securities Regulatory Commission, since April this year, three overseas foreign investment management agencies including BlackRock Fund Management Co., Ltd., Lubomai Fund Management (China) Co., Ltd. and Fidelity Fund Management (China) Co., Ltd. have successively Submitted an application for a wholly foreign-owned public offering fund license to the China Securities Regulatory Commission. On July 31, the China Securities Regulatory Commission has officially accepted the BlackRock fund application.
On July 10, the China Securities Regulatory Commission and the China Banking and Insurance Regulatory Commission jointly revised and issued the "Administrative Measures for Securities Investment Fund Custody Business", allowing foreign banks in China to apply for securities investment fund custody business qualifications.
In terms of products, on May 29, the China Securities Regulatory Commission approved the Shanghai International Energy Exchange Center to launch low-sulfur fuel oil futures trading, and at the same time determined that low-sulfur fuel oil futures were a specific domestic product and introduced overseas traders to participate in the transaction. Up to now, my country’s futures market has many domestic specific products such as crude oil, iron ore, PTA, and No. 20 rubber.
In terms of "going global", on June 17, China Pacific Insurance Global Depository Receipts (GDR) was listed on the London Stock Exchange, the second domestic GDR successfully issued on the London Stock Exchange.
Li Zhan, chief economist of Zhongshan Securities, told the "Securities Daily" reporter that the current two-way opening of China's capital market is accelerating. On the one hand, it will help increase the recognition of China's A-share market by international capital and continue to promote the internationalization of A-shares. The process is also conducive to the introduction of "living water" and promotes the further inflow of foreign capital into China's capital market. At the same time, the characteristics of foreign capital generally focusing on value investment make it easy for high-quality A-share assets to stand out, which is conducive to the stable and healthy development of China's capital market and optimize resources Configuration.
"Further opening of the domestic capital market requires consideration from two dimensions, one is'bringing in' and the other is'going out'." Fan Lei, head of macro research at Guohai Securities Research Institute, told a reporter from Securities Daily that in recent years Since then, substantial progress has been made in opening up the capital market. From an objective point of view, the current two-way opening of the capital market still focuses more on encouraging capital inflows.
Net foreign capital inflow during the year
New QFII/RQFII regulations approach
In terms of the market, foreign capital has maintained a net inflow since this year. On June 19, the FTSE Russell Index increased the inclusion factor of A shares from 17.5% to 25%. According to statistics from Eastern Fortune Choice, as of August 7, the net inflow of northward funds into A shares during the year was 124.094 billion yuan.
According to data from the State Administration of Foreign Exchange, as of the end of June this year, the balance of the A stock market held by foreign investors was US$368.4 billion (approximately RMB 2.58 trillion), an increase of 16% from the end of 2019. Among them, the net inflow of overseas investment in domestic securities exceeded 60 billion U.S. dollars (approximately RMB 420 billion) in the second quarter, which was at a historically high level, indicating the strong appeal of RMB assets; my country's foreign securities investment also maintained a certain scale.
"The most important thing in the future is to optimize various channels and expand foreign investment in Chinese bonds." Zhang Wei, chief macro researcher of Kunlun Health Insurance, told the "Securities Daily" reporter. At present, the US dollar index tends to weaken, which will increase foreign investment in the RMB. The preference for assets and the further optimization of foreign investment channels will help foreign capital further flow into the Chinese market, and can also play a hedging role in the internal tightening of liquidity under the pressure of domestic debt issuance.
"Foreign investors participate in the domestic market mainly through two channels, one is for institutional investors to enter through QFII/RQFII; the other is to enter through interconnection mechanisms such as Shanghai and Shenzhen Stock Connect." Li Zhan said that in January last year, the China Securities Regulatory Commission said , Intends to combine the two systems of QFII and RQFII into one, further relax access conditions, expand investment scope, and unify and simplify its channels and methods for participating in the domestic securities market. It is expected that the China Securities Regulatory Commission will continue to advance. Regarding the Shanghai-Shenzhen Stock Connect, it is expected that the existing specific business implementation measures will be revised in the future to optimize the interconnection transaction process, improve transaction efficiency, and improve the corresponding regulatory mechanism to further simplify the way for foreign investors to participate in the A-share market.
In May of this year, QFII/RQFII quota restrictions have been removed. In June, the chairman of the China Securities Regulatory Commission, Yi Huiman, said in an interview with reporters that the new QFII/RQFII regulations will be promulgated and the opening of the exchange bond market will also accelerate. "The Securities Regulatory Commission will unswervingly continue to steadily promote the high-level two-way opening of the capital market. First, continue to improve the basic system of the capital market. It includes the ongoing reforms of the capital market itself, as well as cross-border investment and financing, transaction settlement The second is to continuously deepen all-round international cooperation. Further optimize the Shanghai-Shenzhen-Hong Kong Stock Connect mechanism, and continuously enrich the all-round and multi-level practical cooperation between the Mainland and Hong Kong. Further improve the Shanghai-London Stock Connect, expand the cross-border ETF exchange mechanism, and strengthen China-Europe financial Cooperation; at the same time comprehensively promote regulatory improvement and risk prevention, improve cross-border capital monitoring and risk early warning mechanisms, strengthen cross-border regulatory coordination and cooperation and information and data sharing, so as to be'open, see clearly, and manageable' to ensure openness The stable operation of the capital market under the environment." Yi Huiman said. (Securities Daily)