PASLA/RMA: foreign investors could flourish
04 March 2015 Shanghai
Image: Shutterstock
Qualified foreign institutional investors (QFIIs) and their renminbi counterparts could still enter China's margin financing and securities borrowing and lending markets, according to a panel at the Pan Asia Securities Lending Association/Risk Management Association Conference on Asian Securities Lending.
They suggested that, with the growing influence of the Shanghai-Hong Kong Stock Connect programme and demand rising from QFII/RQFII themselves, integration is a possibility in the future.
Although QFIIs and RQFIIs can presently invest in cash equities and the like, a panellist explained that Chinese regulators are wary of allowing foreign investors to conduct shorter-term transactions such as margin financing and short selling.
An audience survey at the conference showed that 86 percent of those in attendance were in favour of allowing QFIIs, RQFIIs and foreign institutional lenders to participate in onshore margin financing and securities lending in China, and the majority of the panel agreed.
The panel also claimed that amendments to the country's securities law, which are expected in March, could give investors more opportunities to achieve eligibility.
They also predicted an increase in integration overall with the introduction of Stock Connect.
China's margin finance sector was slow to start after its introduction in 2005, although it has picked up in recent years, jumping from 25 securities companies licensed by 2010 to 91 by 2012, according to the panel.
They suggested that, with the growing influence of the Shanghai-Hong Kong Stock Connect programme and demand rising from QFII/RQFII themselves, integration is a possibility in the future.
Although QFIIs and RQFIIs can presently invest in cash equities and the like, a panellist explained that Chinese regulators are wary of allowing foreign investors to conduct shorter-term transactions such as margin financing and short selling.
An audience survey at the conference showed that 86 percent of those in attendance were in favour of allowing QFIIs, RQFIIs and foreign institutional lenders to participate in onshore margin financing and securities lending in China, and the majority of the panel agreed.
The panel also claimed that amendments to the country's securities law, which are expected in March, could give investors more opportunities to achieve eligibility.
They also predicted an increase in integration overall with the introduction of Stock Connect.
China's margin finance sector was slow to start after its introduction in 2005, although it has picked up in recent years, jumping from 25 securities companies licensed by 2010 to 91 by 2012, according to the panel.
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