Strong domestic institutional investors could support Chinese equities growth: regulator
Published: Nov 15, 2023 05:11 PM
Shanghai Stock Exchange Photo:CFP

Shanghai Stock Exchange Photo:CFP

Foreign capital could act as an importance force in the development of China's capital market, and more efforts should be made to build a strong team of domestic institutional investors in a bid to realize sound competition between domestic and overseas investors, Fang Xinghai, deputy head of the China Securities Regulatory Commission (CSRC) said at the annual Shanghai Stock Exchange Global Investor Conference on Wednesday.

Fang said that the top securities regulator has been promoting opening-up of China's capital market, with progressive results having been made. For example, a total of 20 foreign-owned or controlled securities and investment fund firms have been set up in China since foreign investment cap was removed in 2020, Shanghai Securities News reported.

As this year marks the fifth anniversary of the pilot of registration-based IPO, the number of companies listed in the A-share market has grown to more than 5,300 from over 3,500, according to Fang. The total market valuation of A-share listed firms reached 80 trillion yuan ($11.06 trillion), the second highest in the world, he said.

Chiese authorities have released a raft of targeted policies to support the capital market and macro economy, with investor sentiment in Chinese assets continuing to strengthen, and investors should hold their confidence in the A-share market and wait for another bull market's coming, Yang Delong, chief economist at Shenzhen-based First Seafront Fund Management Co, told the Global Times on Wednesday.

Currently, both yuan and yuan-based assets including A-shares, Hong Kong stocks and Chinese mainland companies listed in the US are underestimated, and more capital is expected to flow to the Chinese market to explore opportunities, according to Yang.

Qiu Yong, chairman of the Shanghai Stock Exchange Board, said at the same forum on Wednesday that the value of the A-share market is yet to be explored and foreign investors are welcome to expand their presence in the market.

The fundamentals supporting China's economic growth over the long run remain unchanged. The Chinese economy has ample room to develop, shored up by more positive conditions for high-quality growth. There is bright prospect for investing in the Chinese market, Qiu said.
The Central Financial Work Conference, held in Beijing from October 30 to 31, noted that strenuous efforts should be made to expand institutional opening up in the financial sector and facilitate cross-border investment and financing, in order to constantly build up a stronger financial sector in the country.

Amid continuous market reform and high-standard opening up, Chinese market remains appealing for overseas institutions.

"China is one of our strategic markets in the world, and we are optimistic about Chinese economic development in the long term," Helen Huang (Huang), managing director for China of world's leading asset management company Fidelity International, told the Global Times in a recent interview. 

In the face of global uncertainty, the Chinese market is a good place to diversify the portfolio and explore untapped value, as China's macro-economic fundamentals are more stable and more resilient to deal with external challenges, Huang said.

As the country's raft of stimulus measures are producing effects, the earnings of listed Chinese companies are expected to rebound in the coming six months, which will drive the recovery of Chinese assets, Meng Lei, China Strategist for UBS Securities Co Ltd, UBS's foreign-invested fully-licensed securities firm in China, said in a note sent to the Global Times.

"We are looking into food and beverage-related stocks that have benefited from business activity recovery and home appliance stocks amid the country's stabilizing real estate market," Meng said.