Experts optimistic about China's capital market

Reuters
Shanghai,China. Published: Sep 14, 2019, 04:03 PM(IST)

A China yuan note is seen in this illustration photo. Photograph:( Reuters )

Story highlights

The State Administration of Foreign Exchange (SAFE) Tuesday announced it would abolish the investment quota restrictions for QFII and RQFII to boost financial reforms and opening-up.

Experts expressed optimism towards China's capital market as the country opens the market to global investors more and more in recent years.

China has been accelerating in opening up its financial market to overseas investment, with B-share, systems of Qualified Foreign Institutional Investors (QFII) and Renminbi Qualified Foreign Institutional Investors (RQFII), Shanghai-Hong Kong Stock Connect, Shenzhen-Hong Kong Stock Connect, and Shanghai-London Stock Connect came into being.

The State Administration of Foreign Exchange (SAFE) Tuesday announced it would abolish the investment quota restrictions for QFII and RQFII to boost financial reforms and opening-up.

Ted Niggli, head of the Morgan Stanley Capital International (MSCI) Index Business in Asia Pacific, has been in China for seven years. MSCI set up its office in China as early as 2004.

He said there are three reasons for China to become an attractive investment destination for global investors.

"The investors being interested, the regulatory framework enhancing at a fast pace and the companies themselves changing, these are three important catalysts for us to believe that over time, China will be a strong destination of investments from investors around the world," said Niggli.

With MSCI, FTSE Russell, Standard and Poor's and Dow Jones entering the Chinese market and increasing the weight of the yuan-denominated A-shares in their indexes, the Chinese capital market is connecting closely with the global market.

Qian Jun, dean of Fanhai International School of Finance with Fudan University, said overseas investors will boost the healthy development of the stock market.

"Overseas institutional investors, particularly long-term institutional investors, follow the so-called rational value investment most. Their acts will promote the stock market to develop more healthily," said Qian.

The China Securities Regulatory Commission published 12 important goals of deepening the reform of the capital market on Tuesday, showing that China is speeding up in reforming its capital market in the future.

Zhang Wangjun, deputy director of the Marketing Department of the Commission, said they will take concrete actions to push forward the reform.

"We will pay attention to the general goal of forging a normative, transparent, open, vigorous and resilient capital market and take concrete actions to implement financial supply-side structural reform to better serve the overall situation of high-quality development of the economy," said Zhang.

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