More leeway for investors in China's markets

Finance | Bloomberg and staff reporter 19 Oct 2021

Bloomberg and staff reporter

Beijing has expanded the scope for foreign investors by adding key commodity and stock market derivatives - the latest move to open its financial markets even as Beijing's crackdown on a broad section of its private sector has roiled markets.

Qualified foreign investors will be able to trade commodity futures, commodity options and stock index options, the China Securities Regulatory Commission has revealed, with the changes to take effect on November 1.

The further opening of markets comes with effort to redirect the export-led economy.

The country has also opened the way for foreign institutions to take full ownership of investment banks, asset management firms and other ventures.

Goldman Sachs said yesterday it has received regulatory approval to take full ownership of its mainland securities venture, easing the way for a push to expand in China.

It becomes the second Wall Street firm to be granted approval to shift to full ownership of its securities business after JPMorgan Chase went to 100 percent in August.

There is also increasing interest in products to hedge risks in China markets as foreign investors expand holdings.

At the same time as political tension rise with the West, Beijing also is tightening control of private enterprises including the education and technology sectors.

Regulators have also relaxed the Qualified Foreign Institutional Investors program - a key channel for global funds to buy China assets - at various times in recent years.

In 2019 it scrapped investment limits on stocks and bonds, meaning global funds no longer needed approvals to purchase quotas to buy such assets.

Separately, China Construction Bank (0939) has appointed Antony Leung Kam-chung an independent non-executive director. A former financial secretary of Hong Kong, Leung is now chairman of conglomerate Nan Fung Group and chairman and co-founder of New Frontier Group.

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