BEIJING, Nov. 21 (Xinhua) -- Since Shanghai- and Shenzhen-Hong Kong Stock Connect debuted in 2014 and 2016, the optimized trading mechanism and increasing types and number of eligible trading products have enabled them to be a pivotal channel for global Renminbi (RMB) assets purchase.
They, together with other opening-up measures, highlighted the new stage of high-level opening-up on capital market and a likely situation where more participation of overseas institutional investors are expectable.
-- "Coming in" of overseas investors at a steady pace
On November 17, 2014, rollout of Shanghai-Hong Kong Stock Connect ushered in a new period when inter-connectivity of financial infrastructure between the Chinese mainland and Hong Kong availed investors of access to each other's stock markets.
Later on December 5, 2016, the mutual market access scheme expanded to offer opportunities for more investors as the Shenzhen-Hong Kong Stock Connect became formally operational.
These mutual accesses and other opening-up policies have translated into strengthened appeal of China, with more and more foreign financial institutions coming to seek business opportunities.
As an established channel for global investors to purchase RMB assets, Shanghai- and Shenzhen-Hong Kong Stock Connect stand for a successful mode to form connections in rules, products and services with offshore financial market.
The Shanghai- and Shenzhen-Hong Kong Stock Connect schemes have sped up the internationalization pace of China's domestic market and diversified investors and related products, said Fang Dongming, head of China Global Markets at UBS.
Apart from integrating the onshore and offshore markets, Stock Connect spurred related two-way trading notably. Compared with November 2014, average daily turnover of northbound and southbound trading on the stock exchange of Hong Kong in the first three quarters of 2024 grew to be 21 times and 40 times of the average daily data of the initial month.
Along with the stable growth in northbound and southbound capital flows, the Chinese mainland and Hong Kong stock markets were more closely connected in terms of investment philosophy and transaction strategies.
Foreign financial institutions also accelerated their pace to set up businesses in China. Statistics showed that by the end of October 2024, 25 foreign-controlled or foreign-funded securities, funds or futures companies got approvals in China and five foreign banks' subsidiary banks in China were nodded to own funds custody qualifications.
-- "Going global" of Chinese businesses on overseas capital markets expedites
When "coming in" continues to flourish, "going global" of Chinese companies in this regard, here referring to their overseas securities offering and listing, also expedited.
By November 17, 2024, 49 Chinese companies got listed on the U.S. stock market this year, higher than the 31 ones in the same period of 2023, and 40 firms went public on the stock exchange of Hong Kong, higher than the comparable figure last year, according to data with Wind.
Overseas listing will not only help enterprises expand their financing channels and obtain quality investment, but also improve their popularity and brand image and sharpen their international competitiveness, said market watchers.
For sci-tech and innovation-driven businesses in particular, overseas listing can bring relatively higher market valuation so as to draw more attention of global capital holders, added market watchers.
Since March 2023, China Securities Regulatory Commission (CSRC) has implemented filing-based administration over overseas securities offering and listing by Chinese companies to bring them more convenience.
By November 17, about 200 enterprises have completed such filing for their overseas initial public offerings (IPOs) and "full circulation", which refers to listing of domestic unlisted shares of H-share companies on the stock exchange of Hong Kong.
Under a basket of supportive measures such as expediting, on basis of related laws and regulations, filing of eligible sci-tech businesses' overseas securities offering and listing, sci-tech businesses are likely to present more and more enthusiasm in overseas IPOs, said market watchers.
-- More opening-up measures foreseeable
In the future, high-level institutional opening-up on China's capital market is anticipated to be optimized with greater stability and transparency so as to better facilitate foreign investment in China.
Foreign investors' A-share investment channels and scale will be further widened. In early November, the amended administrative measures on foreign investors' strategic investment in domestic listed companies were unveiled.
Through lowering investment thresholds from five aspects, the revised measures expand channels for foreign investment in securities market, leverage the potential of strategic investment in boosting related foreign investment and encourage long-term investment and value investing of foreign investors.
Based on the existing policies and rules, foreign institutions are likely to embrace more supportive measures to help them start businesses and invest in China.
Recently, CSRC and the Ministry of Commerce jointly worked out the operation guidance on materializing tax preference for investment of sovereign funds via qualified foreign institutional investors (QFII) scheme and related short-swing transaction and program trading rules were being formulated or revised, said Shen Bing, head of the Department of Fund and Intermediary Supervision of CSRC on the Shanghai Stock Exchange Global Investors Conference 2024 on November 7.
According to Li Ming, deputy head of CSRC, CSRC will staunchly advance all-around institutional opening-up of markets, institutions and products in the future.
Generally, CSRC will enlarge the scale of eligible targets under Shanghai- and Shenzhen-Hong Kong Stock Connect, support rollout of more cross-border ETF products, expand market inter-connectivity via depository receipts, and broaden futures market opening-up to encourage more foreign financial institutions to start businesses in China and craft the "Invest in China" brand, Li said.
(Edited by Duan Jing with Xinhua Silk Road, duanjing@xinhua.org)
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