Financial Associated Press, October 16 (Reporter Lin Jian) With the continuous expansion of the two-way opening of my country’s capital market, foreign capital has become one of the important participating forces in the A-share market. The Financial Associated Press recently learned that the China Securities Regulatory Commission plans to launch another substantive policy to attract foreign investment in A shares, that is, it is studying and formulating two policies for foreign investment to apply a specific short-term trading system, and the relevant ideas and measures have been basically clarified. Fulfill relevant procedures, and will be announced and implemented in accordance with the law when conditions are ripe.
The reporter was informed that the above two policies refer to allowing qualified overseas public funds to calculate the number of securities held by products with reference to domestic public funds, exempting Hong Kong Securities Clearing Company Limited from applying the specific short-term trading system. The proposed clarification of the application of specific short-term trading rules for foreign capital is a research and formulation work carried out by the CSRC after in-depth research, extensive listening to opinions and suggestions from all parties in the market, and authorization by the Securities Law.
From the perspective of past supervision, if multiple public funds managed by a fund company jointly hold 5% or more of the same company’s shares, and buy or sell within 6 months, they are not considered to be short-term transactions. Similar arrangements have been made for the National Social Security Fund. Under the latest institutional arrangements, the requirements for foreign investment will obviously be equal to the corresponding arrangements for domestic public funds and social security. The introduction and implementation of this policy will be regarded as eligible foreign and northbound funds to conduct specific short-term transactions.
Relevant persons said that this is an important measure to further deepen the institutional opening of the capital market, which is conducive to improving the convenience of foreign capital to participate in the A-share market, stabilizing foreign investment expectations, better guaranteeing the operation efficiency of the Shanghai-Shenzhen-Hong Kong Stock Connect mechanism, and promoting high capital market growth. Quality development.
What is the substantive impact?
According to the reporter’s understanding, the CSRC launched the new policy, there are two important basis, one is the practical experience of supervision, and the other is the actual situation of foreign capital.
According to the introduction of relevant professionals, short-term trading refers to the fact that major shareholders, directors, supervisors and other specific entities of listed companies buy and sell the company’s stocks or other securities of the nature of equity in a relatively short period of time, or sell and then buy the behavior of entering. The “Securities Law” stipulates that the purchase and sale of the above-mentioned specific entities within 6 months are short-term transactions. At the same time, the Securities Law authorizes the CSRC to prescribe exemptions.
At present, from the perspective of regulatory practice, in order to support and encourage the development of medium and long-term institutional investors, the China Securities Regulatory Commission has allowed domestic public funds to calculate the number of securities held by products, that is, to combine multiple public funds managed by a fund company to hold shares of the same company. If the shares reach or exceed 5% and are traded within 6 months, they will not be considered as short-term transactions. The National Social Security Fund has also made similar arrangements.
In addition to the above-mentioned regulatory experience, the actual status of foreign investment is also one of the basis. It is understood that under the Shanghai-Shenzhen-Hong Kong Stock Connect mechanism, foreign capital generally enters the A-share market through Hong Kong Securities Clearing Company Limited, and Hong Kong Securities Clearing Company Limited does not actually participate in the transaction as the nominal holder. In addition, at present, there is no essential difference between overseas public fund managers and domestic public fund managers in terms of internal control, governance structure, and investment management model.
In response to the formulation and introduction of the above-mentioned policies, a chief non-bank analyst of a securities firm told the Cailian Press that the relaxation of the foreign short-term trading system will help increase the activity of foreign investment in China, increase the activity of market transactions, and improve the Increase financial opening to the outside world and bring it into line with the international transaction system.
Foreign capital has become an important force in A-shares, with a market value of 2.77 trillion
It is not difficult to find that since 2022, the level of two-way opening of my country’s capital market has been further improved, the all-round opening of markets, institutions and products has been steadily advanced, and the interconnection mechanisms of domestic and foreign capital markets such as Shanghai-Hong Kong Stock Connect, Shenzhen-Hong Kong Stock Connect, and Shanghai-London Stock Connect have continued to deepen. As China’s capital market continues to open to the outside world, foreign capital has become an important participant in my country’s capital market. Data show that as of the end of September 2022, the circulating market value of A shares held by foreign investors was 2.77 trillion yuan, accounting for 4.35% of the total circulating market value of A shares. From January to September this year, the Shanghai-Shenzhen Stock Connect has accumulated a net inflow of more than 52 billion yuan into the A-share market.
According to a reporter from the Financial Associated Press, more and more foreign investors are investing in the A-share market through IPOs, private placements, secondary market transactions and block transactions. During the year, a number of foreign institutions and spokespersons have spoken out, saying that the opportunities for A-shares are expected to outweigh the risks. Some securities dealers analyzed in the interview that it is foreseeable that the subsequent release of the above-mentioned policies is expected to further enhance the attractiveness of foreign investment.