Brokerages face clamp on offshore accounts

China has for the first time issued a notice prohibiting domestic brokerages and their overseas units from taking on new mainland clients for offshore trading, according to an official document seen by Reuters and confirmed by four sources.

New investments by existing clients are also to be "strictly monitored" to prevent investors from bypassing China's foreign exchange controls, said the notice.

The actions, which will restrict capital outflows, come as faltering growth for the world's second-largest economy has spurred investment overseas, weighing on the yuan and prompting authorities to ramp up efforts to stabilise the currency.

The yuan, one of Asia's worst-performing currencies, has weakened 5.5 percent this year as China's post-pandemic recovery quickly lost steam and the US dollar climbed due to interest rate differentials and geopolitical uncertainty globally. That has forced authorities to unveil a slew of measures to stem its decline.

The China Securities Regulatory Commission has told brokerages to stop offering securities trading from offshore accounts such as Hong Kong to new mainland investors, according to a September 28 notice issued by its Shanghai unit.