Since China novel coronavirus pneumonia outbreak, China has been unswervingly promoting the two-way opening of capital market, and is being pursued by international investors.
The restrictions on the ratio of foreign shares of futures, securities companies and fund management companies have been lifted one after another; FTSE Russell has increased the inclusion factor of a shares; JPMorgan Chase has included China's national debt in its index; Goldman Sachs and Morgan Stanley will increase their shareholding in joint venture securities companies to 51%; foreign institutions have increased their net holdings of China's bonds by nearly 60 billion yuan in the first quarter
Analysts pointed out that on a global scale, China's capital market showed stronger stability and gradually became a "safe haven" in the world. Looking forward to the future, the two-way opening of China's capital market will continue to be promoted, and the potential for foreign capital to enter is still great.
Accelerating the distribution of foreign investment
■ from April 1, the restriction on the ratio of foreign shares of securities companies will be cancelled
■ A shares have been successively "entering the index", attracting more investors Recently,
China's A-share market has made new progress in opening up.
On March 20, FTSE Russell raised the inclusion factor of A-share to 2.5% again. At the same time, FTSE Russell said that a shares will be included in 7.5% on June 20, when the inclusion factor of a shares will be increased to 25%.
"The successful implementation of this inclusion reflects the confidence of international investors in the long-term investment value of a shares and the high-quality development of China's economy." The head of relevant departments of the CSRC said that under the circumstances of the recent development of overseas epidemics and large fluctuations in the global financial market, the A-share market operated orderly and showed resilience, creating good conditions for the current round of promotion of the inclusion ratio.
Since last year, the world's three major index companies have thrown "olive branch" to a shares. MSCI raised China's A-share inclusion factor to 20%, FTSE Russell incorporated A-share into its global stock index series and gradually increased the A-share inclusion factor from 5% to 25%, and S & P Dow Jones incorporated A-share listed companies into the S & P emerging market global benchmark index.
A shares have been "indexed" one after another, attracting more international investors. According to MSCI's calculation, each time the factor of 2.5% is included, it will bring us $11 billion of incremental capital to a share. FTSE Russell raised the A-share inclusion factor this time, and institutional analysis believes that it will bring about 30 billion yuan of capital inflow to the market.
Under the epidemic situation, China's financial market is becoming a "safe haven" in the world. Li Chao, vice chairman of China Securities Regulatory Commission, pointed out that from the macro environment faced by the A-share market, at present, China's epidemic prevention and control is at different stages from overseas, and the impact of the epidemic on the A-share market has been gradually digested. From the perspective of the internal structure of the A-share market, the valuation of the A-share market is relatively low. The price earnings ratio of the Shanghai composite index is not more than 12 times, and the price earnings ratio of the Shanghai 50 is lower, less than 9 times. Therefore, both the horizontal ratio with the overseas market and the historical vertical ratio with the Chinese stock market are relatively low, and the investment value appears.
There are also more foreign-owned joint-venture securities companies in the mainland.
Just a few days after FTSE Russell raised its A-share inclusion factor, Goldman Sachs was approved by the CSRC to increase its stake in Goldman Sachs Gaohua Securities Co., Ltd. (Goldman Sachs Gaohua) from 33% to 51%. Almost at the same time, Morgan Stanley will increase its stake in the joint venture Morgan Stanley Huaxin securities from 49% to 51%.
"Increasing Goldman's 18% stake in Gaohua is part of our commitment to inject significant new capital into our business in China over the next five years. We plan to focus on developing and strengthening our existing business in China, expanding our potential market and investing in talent and technology. " Mr. Rhett, CO president of Goldman Sachs Asia Pacific (excluding Japan), said.
It can not only hold shares, but also be wholly owned.
Since April 1, the restriction on the ratio of foreign shares of securities companies has been formally cancelled. Qualified foreign investors can submit an application for establishing a securities company or changing the actual controller of the company in accordance with the requirements of laws and regulations, relevant provisions of the CSRC and relevant service guidelines. The CSRC has made it clear that in the next step, it will continue to actively promote the process of opening the capital market to the outside world, and continue to do a good job in auditing the establishment or change of actual controllers of joint venture or wholly foreign-owned securities companies in accordance with laws, regulations and efficiency.
"The entry of more foreign capital and excellent foreign financial institutions can inject new vitality into China's A-share market and form a positive interaction with the opening of China's capital market. Compared with European and American stock markets, China's A-share market has shown stronger stability during the outbreak, while China's opening-up efforts are increasing, which will help attract more large-scale and high-quality capital into China's stock market. " Dong Dengxin, director of the Institute of financial securities, Wuhan University of science and technology, said.
Optimistic about China's bond market
■ in the first quarter, overseas institutions increased their net holdings of Chinese bonds by nearly 60 billion yuan
■ China's bond market is the second largest in the world
The stock market attracts international investors frequently, and China's bond market also shows strong attraction.
According to data released by the people's Bank of China, in the first quarter, 26 overseas legal entities were added to the inter-bank bond market, with a net increase of 59.7 billion yuan. By the end of March, 822 foreign institutional investors had entered the inter-bank bond market, holding 2.26 trillion yuan of bonds.
China's novel coronavirus pneumonia is particularly attractive in the environment of the new crown pneumonia epidemic, "the low income and the low correlation with US Treasury bonds." In recent months, Peng Shuai, fixed asset portfolio manager at Morgan asset management, has increased his holdings of Chinese bonds.
China China novel coronavirus pneumonia has been unstable in the US and Europe, and the US government bonds have become unreliable, but the bonds issued by Chinese government bonds and major development banks in China remain relatively stable, prompting asset managers to view the Chinese bond market as a new haven.
Optimistic about China's bond market is becoming the choice of more and more international investors. At the end of February this year, Chinese government bonds were officially included in the global emerging market government bond index of JPMorgan. Previously, Citigroup and Bloomberg have respectively included Chinese bonds in their main indexes.
"China's onshore bond market will see capital inflows due to rising yields and the inclusion of Chinese bonds in multiple indexes, which are attractive to foreign investors given the current low yield of us 10-year bonds." China's economy will gradually return to normal after the outbreak, said Qiu WANYING, emerging market strategist at UBS Global Asset Management