Foreign investors gain more access to A shares
More opening-up beneficial for secondary market: experts
China will allow foreigners to open their securities accounts in the A-share market, with experts calling this a “significant leap” that can introduce more capital to the market as well as help listed firms attract foreign talent.
The announcement released by the China Securities Regulatory Commission (CSRC) on Wednesday detailed that firms listed in the domestic market are now able to expand their equity incentive plans to all foreign staff including those working overseas, whereas before, they were only available for foreign nationals working in China.
The revised rules will take effect on September 15, when the China Securities Depository and Clearing Corp will roll out details for the practice of foreigners opening A-share accounts, said CSRC.
“The revisions will play a significant role in China’s further enrichment of investment sources, broadening of channels for capital to flow into the market, optimizing of the market structure as well as enhancing the market’s openness and internationalization,” the CSRC said in a statement on July 8 while seeking public opinion on the revisions.
Dong Dengxin, director of the Finance and Securities Institute at the Wuhan University of Science and Technology, told the Global Times that the latest move is an important signal that China is firmly opening-up its financial market, a pledge the Chinese government made during this year’s Boao Forum for Asia in April.
Before offering direct access to foreigners, foreign investors usually purchased A shares via the stock connect schemes and the Qualified Foreign Institutional Investor System.
“The move is also beneficial to introducing more capital to the secondary market. Although the quantity is minor, it will still bolster the confidence of investors in the A shares,” Yang Delong, chief economist at Shenzhen-based First Seafront Fund Management Co, told the Global Times.
Yang noted that the wider coverage of the equity incentive plan can attract more overseas talent to serve A-share firms.
“As more Chinese firms go global along the routes of the Belt and Road initiative, introducing such a mechanism will help them attract more talent, a valuable resource amid international business competition,” Dong added.