The Chinese national flag (2nd right) flies alongside the flag of the Hong Kong Special Administrative Region (right) outside the Exchange Square complex, which houses the Hong Kong Stock Exchange, in Hong Kong, China, on May 29, 2020. (PHOTO/BLOOMBERG)
BEIJING – Despite multiple unexpected factors rattling global financial market, China has renewed its commitments to further opening its capital market with pragmatic measures to attract more investors, including expanding its stock connect programs.
China will optimize and expand the connectivity of domestic and overseas capital markets, Wang Jianjun, vice chairman of the China Securities Regulatory Commission, told Xinhua in an interview.
Wang Jianjun, vice chairman of the China Securities Regulatory Commission, said the commission is expanding the scope of the Shanghai-Hong Kong and Shenzhen-Hong Kong stock connect schemes, with efforts to step up the inclusion of exchange-traded funds into the two programs
The vice chairman said that the commission is expanding the scope of Shanghai-Hong Kong and Shenzhen-Hong Kong stock connect programs, with efforts to step up the inclusion of exchange-traded funds into the two programs.
To support Chinese mainland firms in getting listed in markets such as the Hong Kong Special Administrative Region and the United States, new rules and regulations will be put into effect. In the same vein, China welcomes qualified international companies to get listed on the mainland stock market.
On top of that, more cross-border investment and risk management products will be provided for overseas investors, the securities regulator said, pledging that it will also build up supervision capacities and enhance cooperation with other countries.
Despite recent volatility in global capital flows, Wang said there are "no fundamental changes in the capital flow and trading of China's capital market."
Since the start of this year, risks arising from geopolitical conflicts, the COVID-19 pandemic, and the monetary policy shifts in major economies have prompted jitters among global investors.
According to data from the Institute of International Finance, foreign capital has been pulling out of the emerging markets in March and April, but China's equities posted about $1 billion in inflows in April.
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What's worth noticing is that long-term funds have also kept flowing to China this year, a signal that foreign investors remain optimistic about the prospects of Chinese stocks and the country's economic growth.
China's listed firms posted steady performance last year, turning in satisfying financial reports to shareholders. According to data from 4,804 listed firms, these companies raked in 66.4 trillion yuan (about $9.87 trillion) in operating revenue and 5.1 trillion yuan in net profits in 2021, up 19.3 percent and 19.8 percent from a year ago, respectively.
And the market has continued to grow with more players. In 2021, the number of listed firms on the mainland stock market rose by 524 to about 4,700, with their aggregate market capitalization ranking second globally.
Commenting on Chinese A-share market volatilities this year, Wang said that it would not derail China's capital market from its long-term positive development trend.
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There were some "overreactions" in the market, Wang said, believing that the influence of these risks is "controllable" and the steady operation of the market is underpinned by solid foundations.
The Chinese economy has sustained its recovering momentum as supply and industrial chains have been gradually unsnarled, Wang said, noting that pro-growth policy mixes have also sent positive signals to several primary sectors and helped anchor market expectations.
In the eyes of Fang Xinghai, also vice chairman of the securities regulator, China's growth potential is yet to be fully unleashed, and the fundamentals of its sound economic development will remain unchanged.
A country's foreign capital attraction capacity depends partly on its opening-up policy and China is pretty clear about the direction and means of its higher-level opening-up, said Fang.
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Li Zhan, an economist with Zhongshan Securities, said China should make its capital market more internationalized when rolling out a registration-based initial public offering system.
More policy measures should be introduced to lower the threshold for overseas capital, facilitate cross-border investment and develop international financial products, Li said.