Chinese stocks opened to foreign workers

FOREIGNERS working in China can now invest in domestic A-shares, Chinese securities regulators announced recently. The news is expected to open the floodgate to some 900,000 foreign residents working in Mainland China who can now access the country’s $7-trillion stock markets in Shanghai and Shenzhen.

For three decades since the Shanghai bourse launched in 1990, stock trading to foreigners was closed and only granted to large funds from 2003 through the Qualified Foreign Institutional Investor (QFII) scheme, which to date has totaled over $100 billion from 287 foreign firms. This was followed by Stock Connect and Bond Connect in 2016, where foreign institutions could trade domestic stocks and bonds through Hong Kong.

Tens of thousands of foreigners in many Chinese cities mostly have their personal wealth stakes in businesses and big-ticket items like real estate. Malaysian business owner Pavo Tan, who moved to China 12 years ago, asked if there was a good stockbroker who could provide advice that would enhance his investment portfolio with more opportunities.

Abi, an IT consultant from Philippines who has been working in a Beijing e-commerce company for over eight years, was thrilled by the news as she has been trying to buy into Chinese tech stocks. Abi has been looking at IPO opportunities for years and for her contacts back in her home country.

A veteran private equity investor in the China’s real estate for over 12 years, Han Jin took action on the news. A Korean national, she consulted her country’s pension funds and family offices investing in China’s bond market, which was recently opened to foreign investors. Jin thinks the availability of A-shares have given her opportunities to invest in quality Chinese listed companies directly instead of fixed income products.

The Chinese economy is seen as having ample room for growth for its listed companies and the news should lure more foreign participation. Recent months of strong buying from foreign institutional funds in the domestic stocks and bonds have seen billions of dollars a day in investments.

Access to the stock market is a major move to open up China and it is foreseeable that the Chinese currency will completely free float and become a major global currency within a decade or even faster. CHINA KNOWLEDGE