China opens financial sector wider to foreign investment
▶ Country is pressing on with pledge to welcome more competition and will allow overseas bond ratings
China opened up its financial sector to more foreign investment as the government said it will take targeted measures to cope with challenges facing the industry.
Foreign investors can take a stake or control entities including wealth management units of commercial lenders, pension fund managers and currency brokers, the central bank said yesterday. The measures were unveiled after a high-level meeting on Friday chaired by Vice Premier Liu He, at which policymakers discussed targeted steps to counter rising risks and challenges facing the $44 trillion (Dh161.5tn) industry.
China is pressing on with its pledge to welcome more overseas competition in the financial sector. The sheer size of the industry makes it attractive as winning even single-digit market shares would offer sizeable profits.
Other measures announced yesterday include allowing overseas credit ratings companies to rate all bonds listed on the exchange and interbank market. Foreign institutions can now be the lead underwriters in the interbank bond market.
China said it will scrap foreign ownership limits of securities companies, fund companies, life insurers and futures companies in 2020 instead of 2021, and allow foreign insurers to hold more than 25 per cent stake in Chinese insurance asset management companies.
The country is also removing the entry restriction of 30 years of operating experience for foreign insurance companies. It will take further steps to make it easier for foreign institutional investors to invest in the interbank bond market.
Foreigners hold only 1.6 per cent of the nation’s banking assets and 5.8 per cent of the insurance market, according to Guo Shuqing, China’s chief banking regulator. Authorities have so far approved plans by UBS Group, Nomura Holdings and JP Morgan Chase to take majority stakes in local securities ventures. JP Morgan said last year it plans to raise its holding to 100 per cent when rules allow.
China released figures this week showing growth in the world’s second-largest economy slowed to 6.2 per cent in the second quarter, the weakest pace since at least 1992 when the country began collecting the data.
The government will carry out a combination of short-and long-term steps that will take into account both micro and macro factors to boost demand and create new growth drivers, the State Council said yesterday. “Complicated” international and domestic issues are posing more challenges currently and for the near future, according to the council.
Chinese trade negotiators have yet to meet their US counterparts since President Donald Trump and President Xi Jinping agreed to a tentative truce last month in Japan. Mr Liu, who is leading trade talks for China, spoke with US Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer this week, but slow progress has raised concerns on how the trade tensions will play out.
Policymakers will continue to implement prudent monetary policy while adopting countercyclical adjustments in a timely and appropriate manner to ensure reasonable and ample liquidity, according to the State Council. The government will also work to resolve liquidity risks of small and medium-sized financial institutions and block contagion and expansion of risks, said the council.
Authorities have so far approved plans by UBS Group, Nomura Holdings and JP Morgan Chase to take majority stakes in local securities ventures