Technical obstacles hamper listings by foreign firms
China will continue to reform and open up its capital markets to foreign investors by raising the cap on stakes they may hold in domestic securities firms, an official from the China Securities Regulatory Commission (CSRC) said on Sunday.
"Our capital markets, especially the securities and futures markets under the supervision of the CSRC, welcome foreign investors and services providers to expand their business in China," Fang Xinghai, vice chairman of the CSRC, said at a press conference in Beijing.
In an effort to further open up, the CSRC plans to raise the cap for foreign institutional investors' shares in domestic securities firms, according to Fang.
Currently, foreign investors' stakes in joint-venture securities houses, fund management firms and futures companies are capped at 49 percent, information from the CSRC showed.
Also, the commission aims to attract foreign investment into China's stock and bond markets through expanding the Qualified Foreign Institutional Investors quota and other mechanisms such as the Shenzhen-Hong Kong Stock Connect and Shanghai-Hong Kong Stock Connect, he said.
Fang said that the CSRC is boosting market openness through bilateral or multilateral agreements, and bilateral investment negotiations are in progress with the US and Europe.
However, any reforms should be carried out in a stable market environment to be effective, CSRC Chairman Liu Shiyu said at the same briefing.
"In the capital markets, both market operations and governmental supervision should stick to the principles of stability and progress …Thus, the commission proposed to make breakthroughs in key rules relating to capital market participants," Liu said.
Li Huiyong, chief economist at Shenwan Hongyuan Securities, told the Global Times on Sunday that regulators should optimize laws and regulations about public companies, including funding, strict rules for delisting and information disclosure. The authorities should also improve transaction management in such areas as investor protection, he said.
Fang said that the authorities are discussing how foreign companies could list in the domestic stock market, but there is no timetable yet as technical challenges remain.
For example, accounting standards in the U..S, Europe and other countries and regions can't be fully harmonized with China's own standards, and disclosure rules overseas are different from those in China. So adjustments are needed for foreign corporations to list in the A-share market, according to Fang.
In 2016, 248 firms' IPO applications were approved in China, and the companies raised more than 163 billion yuan (.75 billion), Liu said. The number of companies added to China's New Third Board doubled in the year to surpass 10,000, he added.