Equities on way to gain more shine

Sentiment among foreign investors seen recovering as COVID woes easing

As China gains better control over the latest COVID-19 resurgence and the A-share market's relative investment value has become increasingly noticeable from a global perspective, foreign investors' interest in A-share companies, which has been mounting over the past few years, will continue this year, said Fang Xinghai, vice-chairman of the China Securities Regulatory Commission, the country's top securities watchdog.

Fang made the remarks at a four-day Global Investor Conference, which was kicked off by the Shenzhen Stock Exchange on Tuesday. China's efforts in further expanding its capital market, including the stock connect mechanism linking the Shanghai and Shenzhen bourses with the Hong Kong exchange, and relaxed regulations on qualified foreign institutional investors, have largely facilitated foreign investors accessing the A-share market, he said.

Foreign investors' exposure to the A-share market now stands at nearly 5 percent of total market value. Their accumulated net investment in A-share companies via the stock connect mechanism stands at over 1.6 trillion yuan ($237 billion), Fang added.

Experts from UBS Global Wealth Management's Chief Investment Office suggested that investors should align their positions in A shares with their strategic allocations globally, as unique opportunities have been implied by China's long-term development plans.

Fang stressed that China has grown into the world's second-largest capital market amid continued opening-up, with the total market value of A-share companies exceeding 75 trillion yuan. The 4,700-strong listed companies provide many choices for onshore and offshore investors, he said.

An increasing number of A-share companies have released their environmental, social and governance reports over the past few years, and such information disclosure has been valued by international investors. Amid this trend, "A-share companies will nurture more technology and business innovations, which will become another major selling point for global investors," Fang added.

The futures market is also further opening up with nine products-such as yuan-denominated crude oil futures-made available to international investors. Their position in these products now accounts for up to 10 percent of total market value, said Fang.

With the limit on foreign ownership in securities and futures companies removed in 2020, a total of 12 such firms either wholly owned or controlled by foreign institutions have been approved by the central regulators.

In August 2021, JPMorgan became the first foreign institution gaining approval for a wholly owned securities firm in China. Mark Leung, chief executive of JPMorgan China, said that the firm has obtained all the financial licenses for conducting securities brokerage, proprietary, consulting, underwriting and sponsoring businesses in China, all of which are based on the deepened opening-up of the Chinese financial market.