China opens stock, commodity derivatives to foreigners


It is allowing foreign investors to expand their financial asset holdings in the country
Newsfeed19 Oct 2021
    Photo credit: AFP Photo


    MAINLAND CHINA & HONG KONG

    China’s regulator expanded the investment scope for foreign investors, adding key commodity and stock market derivatives in 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, China Securities Regulatory Commission (CSRC) said on its website on Friday (15 October). The changes will take effect 1 November.

    China is opening its financial markets to bring in more foreign investments to redirect its export-led economy. The country has also opened to foreign banks taking full ownership of investment banks, asset managers and other ventures. Goldman Sachs Group (GS US) on Monday announced it had received approval to take full ownership of its securities venture, easing its push to expand in China.  

    There is increasing interest in products to hedge risks in China’s markets as foreign investors expand their holdings. Beijing is also tightening control of private enterprises ranging from the education to the technology sectors at the same time as political tension is on the rise with the West.  

    Regulators have relaxed the Qualified Foreign Institutional Investors programme – a key channel for global funds to buy China assets multiple times in recent years. In 2019, it scrapped investment limits on stocks and bonds, meaning global funds no longer need approvals to purchase quotas to buy such assets.

    Last year, CSRC said it planned to expand the derivatives market by letting foreigners use financial futures, commodity futures, and options without giving a time frame. – Bloomberg News.

    On Monday, the Hang Seng Index rose 0.31% to 25,409.75 while the Shanghai Composite Index slipped 0.12% to 3,568.14.

     

    REST OF ASIA

    Thailand is seeking to speed up criminal proceedings to crack down on insider trading, securities fraud, and other illegal financial transactions, according to the nation’s top regulator.

    The country’s Securities & Exchange Commission (SEC) plans to have more authority to investigate criminal dealings in equities, bonds, and digital assets, according to secretary general Ruenvadee Suwanmongkol. The proposal would speed up charges as the current process, mostly done through the police, takes a long time, she said.

    Still, the current punishments are insufficient to stem the increase in illegal transactions in the market, Ruenvadee said.

    The SEC plans to have more power to conduct criminal investigations for the possible violation of securities laws similar to countries such as the US, said Ruenvadee. Expanded authority includes the subpoena of witnesses, records, documents, and information, she said.

    The increased authority and enforcement are the key amendment of existing Securities & Exchange Act that has been forwarded to the finance ministry for consideration, Ruenvadee said. The ministry will discuss with other law enforcement agencies before being forwarded to the Cabinet and parliament for ratification, she said. – Bloomberg News.

    Australia’s S&P/ASX 200 Index rose 0.28% to 7,401.70 on Tuesday morning, adding to Monday’s 0.26% rise to 7,381.10.

    South Korea’s Kospi Index climbed 0.84% to 3,031.90 at the open on Tuesday, rebounding from Monday’s 0.28% fall to 3,006.68.

    The Taiwan Stock Exchange Weighted Index lost 0.45% to 16,705.46.

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