China still lacks interest from foreign investment and must take steps to mitigate this, says Vice-chairman of the China Securities Regulatory Commission Fang Xinghai.
“Foreign investment accounts for just 2% of the total value of the A-share market… so we need to open it up further,” the South China Morning Post quotes Fang as saying.
China’s closed capital account has acted as a wall against the free flow of foreign funds into the Chinese domestic stock market, but recent talk of reform and liberalisation policies has suggested this might be changed, especially as China’s stock market lags amid external economic threats.
The inclusion of A-shares on the MSCI Emerging Market Index earlier this month was a significant step in the direction of opening China’s financial sector to overseas investment. According to Fang, however, Beijing wants to increase the 5% weighting of A-shares on the index to 15 or 20%.