Foreign investment casts a "vote of confidence" in the Chinese market

  Recently, the Shanghai Local Financial Supervision Bureau announced that a number of international asset management institutions have recently actively applied for the Shanghai Qualified Foreign Limited Partner (QFLP) and Qualified Domestic Limited Partner (QDLP) pilot program, and are firmly optimistic about the future development of Shanghai as an international financial center. The mid- and long-term plans of international asset management institutions to deeply cultivate the Chinese market have not changed.

  The layout trends of international asset management institutions and giants have always been regarded as a barometer for predicting economic prospects.

Experts said that China's sustained and stable economic recovery, huge market potential, complete industrial and supply chain, and determination to promote reform and opening up are the keys to attracting foreign investment to cast a "vote of confidence".

Accelerated entry of foreign institutions

  According to the Shanghai Local Financial Supervision Bureau, recently, four institutions including Hanling Capital, CCB International, CDH Investments, and Jifu Asia (Phase II) have applied to participate in the QFLP pilot; BlackRock Fund and Anzhong Investment Institutions apply to participate in the QDLP pilot.

At present, the pilot qualifications of 6 asset management institutions have been approved.

  Against the background of rising global risk aversion, the Chinese market is still actively deployed. Many international asset management institutions said that this is out of confidence in the Chinese market.

Tang Xiaodong, head of BlackRock China and chairman of BlackRock Fund, said that BlackRock believes in and is optimistic about the potential of the Chinese market for a long time. The approval of the QDLP business this time is a good opportunity for BlackRock to further introduce overseas investment and risk management experience. .

Hu Ning, managing partner of CDH Investments, said that Chinese assets will not only achieve steady growth relying on the domestic real economy, but will also play the role of safe-haven assets in the global market.

  In addition, many international asset management institutions plan to increase their business in China and have submitted applications for additional pilot quotas.

A few days ago, the three QDLP pilot institutions of Credit Suisse Investment, Pinhao Investment and Rui Rui Investment were approved to add additional quotas of US$200 million, US$200 million and US$100 million respectively, and the total approved quotas reached US$400 million, US$400 million and US$150 million respectively. ; The two QFLP pilot institutions of Hainahua and Xinjing Investment added an additional investment quota of US$70 million and US$500 million respectively, and the approved total quota reached US$700 million and US$1 billion respectively.

  "International asset management institutions are actively entering China's capital market, which shows that relevant institutions trust the future development of China's economy and capital market." Li Zhan, chief economist of China Merchants Fund Research Department, said that China's financial opening to the outside world continues to advance, and cross-border investment policies continue to improve. , the channels for foreign capital to participate in the domestic financial market have been continuously optimized, attracting more and more international investors.

  Tian Lihui, Dean of the Institute of Financial Development of Nankai University, believes that the "running" entry of international asset management institutions not only means that the internationalization process of my country's capital market is constantly advancing, and the business environment is continuously optimized; it also means that the Shanghai Global Asset Management Center has won the international Recognition of asset management institutions, Shanghai's status as an international financial center has been consolidated; it also means that international asset management institutions can focus on value and be optimistic about the development of the Chinese market in the long run.

This will help guide some asset management institutions that lack long-term investment vision to refocus on the future, stabilize market sentiment, and promote the return of value.

Firmly optimistic about the Chinese market

  At present, the global epidemic is still repeatedly delayed, geopolitical conflicts are intensifying, and the situation of cross-border investment is still severe.

There are voices of concern in the market. Will China's attractiveness to foreign investment weaken in the future?

  It is undeniable that the volatility of global cross-border capital flows has risen since the beginning of this year.

Judging from the trading situation of Shanghai and Shenzhen Stock Connect, there was a net inflow of foreign capital in January and February, a net outflow in March, and a net inflow in April.

In this regard, Wang Jianjun, vice chairman of the China Securities Regulatory Commission, said recently that from historical experience, it is normal for foreign capital to enter and exit, and there has been no fundamental change in foreign capital flows and transactions recently.

Since the beginning of this year, allocation and long-term funds have maintained a net inflow, indicating that foreign investors are optimistic about the long-term investment value of A-shares.

  Looking at the time axis, the pace of foreign capital entering the Chinese market has not slowed down, but accelerated.

Last year, the net inflow of foreign capital into the A-share market was 384.6 billion yuan, the highest level in the past five years; from 2019 to 2021, my country's total foreign investment in the stock market reached 887.4 billion yuan.

  "The attractiveness of China's capital market to foreign investors will continue to increase, and the continued inflow of foreign capital into China will continue to be a major trend in the future." Li Zhan said that China has recovered rapidly from the impact of the epidemic, superimposed on the large scale of the domestic market, improved innovation capabilities, and increased human resources. With the advantages of abundant capital and other advantages, it has long-term attractiveness to foreign capital.

  my country's policies and measures to actively introduce foreign capital have also boosted foreign investment confidence in China.

Recently, a batch of new opening-up measures have been implemented one after another.

In April this year, the China Securities Regulatory Commission issued the "Opinions on Accelerating the Promotion of High-Quality Development of the Public Fund Industry", proposing to support high-quality overseas financial institutions with long-term investment willingness in China's capital market to set up fund management companies or expand their shareholding ratios; The China Banking and Insurance Regulatory Commission issued the "Notice on Clarifying the Relevant Measures for the Opening-up of the Insurance Intermediary Market", which greatly abolished the access restrictions of foreign insurance brokerage companies and lowered the access threshold for foreign insurance intermediary institutions.

  Under the multiple advantages, foreign institutions are firmly optimistic about the Chinese market and remain optimistic about the future trend of A shares.

Standard Chartered Bank recently released a report saying that due to policy support and relatively cheap valuations, Standard Chartered still believes that Chinese stocks may outperform global stocks in the long run.

Morgan Stanley also recently released a report saying that it is still optimistic about A-shares, which can benefit from potential easing policies in the short term and are consistent with long-term growth opportunities (IT, industry, green economy, etc.).

Expanding and opening up

  More and more foreign financial institutions and investors are actively "coming in" to jointly explore and share the vitality of China's economy.

But in general, there is still a lot of room for improvement in attracting foreign investment into the market.

At present, foreign shareholding accounts for about 4.5% of the circulating market value of A shares, while foreign capital in the Korean and Japanese markets accounts for 20% to 30% of the circulating market value of the stock market.

  There is still room for policy optimization to attract foreign investment into the market.

Li Zhan said that at present, there are still some blocking points and difficulties for foreign institutions to enter the Chinese market.

Taking QFLP as an example, it still faces some constraints in terms of investment scope and access threshold. Its qualification application involves the pre-approval, industrial and commercial registration, fund access and other procedures of local financial regulatory authorities and foreign investment industry policies. The foreign exchange management department shall impose regulatory constraints on quota approval, capital remittance, foreign exchange settlement and investment.

In addition, there are some differences in the relevant regulations on QFLP policies in different places, and foreign institutions need to identify and abide by them.

  How to further unblock the channels for foreign institutions to enter the Chinese market?

Li Zhan believes that it is necessary to further open up the financial market and at the same time enhance the convenience of foreign investment and financing.

First, continue to simplify and optimize the investment process of foreign investors in the Chinese market, appropriately relax administrative approval, foreign exchange and business controls, lower the entry threshold, and provide more convenient channels for foreign institutions.

Second, gradually relax the scope of foreign investment, provide more diversified investment targets, and meet the diversified investment needs of foreign investors.

In addition, industrial and consumption upgrades can be accelerated, and more valuable investment prospects can be shown to global investors.

  "Foreign institutions entering the Chinese market need to work on compliance operations, policy understanding and institutional operations." Tian Lihui believes that my country's regulatory authorities should also pay attention to the specific problems encountered by foreign institutions in the domestic business development, and optimize the business environment in a targeted manner. Further promote regulatory transparency and market internationalization.

In addition, it is necessary to analyze the actual scale of foreign investment, investment duration and capital flow, etc., and do a good job of policy guidance to continuously improve the quality and level of foreign capital utilization.

  With the orderly advancement of financial opening up, foreign institutions will embrace more fields in China in the future.

Wang Jianjun said that next, the CSRC will launch more practical measures to expand opening up, including optimizing and expanding the interconnection of domestic and foreign capital markets, broadening the scope of the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect, expanding and optimizing the Shanghai-London Stock Connect mechanism; enriching cross-border The supply of investment and risk management products will steadily expand the international varieties of commodities and financial futures; strengthen the building of regulatory capacity under the conditions of opening up, deepen cooperation with overseas regulatory authorities, and strengthen communication with international investors, so as to build a good foundation for the high-level opening of my country's capital market. a predictable international environment.

  Li Hualin