China boosts foreign access to huge onshore capital markets. N

08 Feb

FT reported at 2pm Sunday

China boosts foreign access to huge onshore capital markets. New rules that came into effect on Sunday November 1; open up futures trading, allow the lending out stocks and other changes. The new rules combine with the existing QFII scheme with amendments to simplify and speed up the process by which international investors can get access to the Chinese markets. Another important change is the removal on their position limits.

These latest moves should also help China meet more of the requirements that the likes of the MSCI want to see in order to increase China’s weighting in the indexes.

China is keen to attract as much cash into the county as possible as it seeks to stimulate the economy and counter the impact of US tariffs and sanctions. China is I think trying to preempt any attempt by Washington to restrict investment. A while ago Trump persuaded US Federal funds form investing in some China companies. He has also put pressure on Chinese companies listed in the US to revise their accountancy reports or face delisting. Which has been good news for HK short term in new dual listings. I think China is working on the principle that once the money is invested and inside China then even if Washington changes the rules it will be able to hold onto the cash.

Increasing foreign investors will also help the Party should there be a market crash as Institutional investors take a view on the markets than retail investors and so their presence should dampen some of the wilder moves.

For Monday’s trading this is likely to give retail investors increased confidence; so good fro sentiment.

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