AKTUELLT JUST NU

Foreigners Hold up to 8% of China's Mainland Equities, UBS Exec Says

09/6 2020 18:30

An increasing portion of Chinese mainland equities are held by foreigners as cross-border trading frameworks have remained popular amid the Covid-19 pandemic, according to the head of UBS China global markets.

The ratio of overseas investors has risen to 7 or 8 percent from last year's 6 percent, Thomas Fang told Yicai Global yesterday in an exclusive interview. The Swiss investment bank has been among the top institutional investors pouring money into the mainland this year, he added.

Since the beginning of the year, net inflows of funds via Hong Kong's stock connect programs has reached CNY90.1 billion (USD12.7 billion) by yesterday's market close, according to data from the Hong Kong Exchanges and Clearing.

And that should not be all. "Overseas investors will continue to increase their mainland investment via the financial corridor of Hong Kong," said Fang.

Nearly CNY70 billion left the mainland in March but as the epidemic started easing over the next couple of months, massive amounts of funds came back, according to Fang. "This reflects the stock connect programs' resilience amid the double whammy of Covid-19 and market volatility."

The two programs of the Shanghai-Hong Kong Stock Connect and the Shenzhen-Hong Kong Stock Connect allow foreign investors to access mainland equities and mainland ones to trade Hong Kong-listed ones.

But more could be done. Although Chinese regulators have recently scrapped quotas on the dollar-dominated qualified foreign institutional investor program, investors are looking forward to further expanding their scope of investment to government bond futures, commodity futures, bond repurchases, and private equity funds, Fang added.