China to stabilise, further open markets

China's crackdown on illegal market activities has intensified since the mid-2015 stock market crash that wiped out almost US$3 trillion (S$4.2 trillion) of share value.
China's crackdown on illegal market activities has intensified since the mid-2015 stock market crash that wiped out almost US$3 trillion (S$4.2 trillion) of share value.PHOTO: AGENCE FRANCE-PRESSE

BEIJING • China will focus on the stable development of its capital markets this year, but will press ahead to further open its markets to foreign companies, the top securities regulator said yesterday.

"We will not waver from reforms to make China's capital markets more market-based, law-based and international," Mr Liu Shiyu, chairman of the China Securities Regulatory Commission (CSRC), told a news conference in Beijing.

Chinese regulators have turned their sights on controlling risks in financial markets as speculative activity and leverage in the economy rise, with the securities regulator vowing to clear out "abnormal phenomena" from capital markets.

The commission recently pledged to target "barbaric" leveraged buyouts and to restrict excessive fund-raising by some listed companies, with a focus on private share placements.

Mr Liu said earlier this month that CSRC would take down law-breaking financial tycoons he called "giant crocodiles", saying they will not be allowed to take advantage of retail investors.

China's crackdown on illegal market activities has intensified since the mid-2015 stock market crash that wiped out almost US$3 trillion (S$4.2 trillion) of share value.

PRESSING AHEAD WITH REFORMS

We will not waver from reforms to make China's capital markets more market-based, law-based and international.

MR LIU SHIYU, chairman of the China Securities Regulatory Commission, on efforts to develop China's capital markets.

Mr Liu, who was appointed CSRC chairman in early 2016, said balancing the needs for stability and progress was crucial, especially in managing the primary market.

Limiting or halting initial share sales in order to stabilise the secondary market does not "solve the problems of long-term healthy development of capital markets", he added.

CSRC deputy chief Fang Xinghai said at the same news conference that China is discussing measures that would allow foreign firms to take a larger stake in domestic joint venture securities and futures brokerages, without providing a timetable for any changes.

Morgan Stanley and UBS Group are set to raise their stakes in their separate Chinese securities joint ventures to 49 per cent, people with direct knowledge of the moves confirmed last month.

Mr Fang said there was no timetable for the launch of an international board to allow foreign-invested enterprises to list shares domestically in China, adding that issues such as accounting treatment and disclosure rules were still being studied.

Mr Liu declined to confirm a Reuters report on Friday that regulators are considering offering a shortcut for some of China's largest technology firms to list their shares on domestic markets, allowing them to jump a long queue of applicants and boost domestic bourses.

China has been losing out to the New York Stock Exchange and Nasdaq on key technology listings, so more initial public offerings at home could mean millions of yuan in revenue for Chinese investment banks, which dominate domestic stock issuance.

REUTERS

A version of this article appeared in the print edition of The Straits Times on February 27, 2017, with the headline 'China to stabilise, further open markets'. Print Edition | Subscribe