A staff member walks past the Shenzhen Stock Exchange in Shenzhen, south China's Guangdong Province, Sept. 21, 2020. (Xinhua/Mao Siqian)
BEIJING, April 27 (Xinhua) -- China's Stock Connect program has made enhancements to the trading calendars starting from Monday, allowing investors to trade on all days when both the mainland and Hong Kong markets are open. It is hailed as a significant move to promote high-level two-way opening up of the capital market, reported China Securities Journal.
With accelerated implementation of measures and policies facilitating opening up, it is believed that Chinese capital market should witness further two-way opening up in the future. Through coordinating both domestic and international markets and exerting the resource allocation function of capital market, the goal is to better meet the needs of cross-border investment and serve real economy.
-- Two-way opening up steadily advanced
Since the beginning of this year, a number of moves have been recognized as indicators of steady progress in the high-level two-way opening up of the capital market.
On January 19, the China Securities Regulatory Commission (CSRC), China's top securities regulator, approved Standard Chartered to set up its wholly-owned securities business in the country, showing the continuously broadened market access of foreign investment and accelerated pace of foreign firms' China business.
As Schroder Investment Management Limited and AllianceBernstein Holding were recently nodded to operate wholly-owned fund management firms in China, the country is also witnessing an expanding scale of wholly foreign-owned fund companies.
The Stock Connect program among capital markets of the Chinese mainland and China's Hong Kong has been continuously welcoming expansion of eligible shares. On March 13, the number of stocks eligible under the Shanghai Stock Connect increased by 598 to more than 1,190, taking up over 90 percent of the market capitalization. Meanwhile, 436 shares were added to the Shenzhen Stock Connect, bringing the total number to 1,336, which covers 86 percent of the market capitalization.
Since this recent expansion, a number of newly-added shares have been well received by the market, leading to a trend of northbound funds net inflows. Experts believe that this will support foreign investors to invest in the A-share market, attracting more medium and long-term overseas funds and promoting institutional opening up of the capital market at a higher level.
Besides, with the recent enhancements made to the trading calenders of the Stock Connect program, the efficiency of cross-border investment has been further improved. The move allows investors to better hedge the market risks, said Zhou Jianhua, an analyst with Central China Securities, predicting that the annual turnover should increase by 800 to 900 billion yuan (about 130 billion U.S. dollars).
-- Domestic indices going global
Promoting domestic indices to go global and gain international influence is another measure toward an opening-up capital market.
On April 18, the Shenzhen Stock Exchange announced its recent cooperation with the Stock Exchange of Thailand (SET) on displaying index change. Earlier in March, the Shanghai Stock Exchange had also cooperated with the SET on index display.
By actively promoting the going global of indices, China's stock exchanges are offering more convenience for international investors through allocating more investments and products, according to Yang Chao, an analyst with the research institute of China Galaxy Securities. This helps increase the global influence of China's domestic indices, said Yang.
Nowadays, A-share listed companies are seeking to issue Global Depository Receipts (GDRs), which not only provides new paths for Chinese firms to access overseas market, but allows overseas investors to participate in the domestic market in new ways.
Data shows that as of April 13, 14 companies have successfully issued GDRs, raising over 5 billion U.S. dollars in total, with an average of 360 million U.S. dollars each. The Shenzhen Stock Exchange and the Shanghai Stock Exchange both pledged to steadily promote listed companies to issue GDRs overseas.
Taking effect on March 31, a set of new regulations released by the CSRC has ruled out a unified filing-based management for companies' direct and indirect overseas offering and listing activities, as well as a coordination mechanism that improves cross-border regulatory cooperation.
The measures are to provide stronger support for domestic companies to list and offer securities on overseas markets, making lawful use of both domestic and overseas market resources for regulated and sound growth.
-- Opening up measures to be continuously improved
China's capital market will unswervingly expand its high-level institutional opening up and accelerate the introduction and implementation of related measures, said Fang Xinghai, vice chairman of the CSRC at the fifth China-Singapore (Chongqing) Connectivity Initiative Financial Summit on April 20.
"Recently, we have had discussions with the People's Bank of China, the State Administration of Foreign Exchange, the CSRC and the China Banking and Insurance Regulatory Commission on how to further expand connectivity," said Julia Leung, CEO of Hong Kong's Securities and Futures Commission.
With increased connectivity, China's capital market is looking at multidimensional opening up. In a recent meeting with representatives of international financial institutions, Yi Huiman, chairman of the CSRC, along with other CSRC officials, made it clear that the country will carry out comprehensive reform and continue to promote opening up on multiple dimensions including institutions, markets and products.
In the future, opening up of the capital market will focus on the improvement of basic institutions, expansion of products for trade and strengthening of cross-border regulatory cooperation, according to Chen Li, chief economist of Chuancai Securities.
It is expected that the capital market will intensively bring in high-quality resources from overseas to promote two-way communication, said Chen, noting that the institutions, rules and standards of Chinese market will continue to integrate with those of the international market, supported by strengthened cross-border regulatory cooperation.
"Under the new development pattern, opening up of the capital market should take into account the balance between openness and security," said Tian Xuan, associate dean of Tsinghua University PBC School of Finance, reminding that international experience on market regulation should also be introduced to the domestic market, so as to improve the capability of preventing various kinds of financial risks.
(Edited by Yu Huichen with Xinhua Silk Road, yuhuichen@xinhua.org)
A single purchase
