Foreign financial institutions beef up investment in China amid greater opening up

Since the start of this year, an increasing number of foreign financial institutions have cast a vote of confidence in China by establishing new securities entities and expanding the scope of their existing businesses in a market that continues to grow and open up.

Singapore-based DBS Group has obtained regulatory approval to increase its stake in the DBS Securities China to 91 percent from 51 percent, with the transaction valued at about 823 million yuan (114.33 million U.S. dollars), according to the group on Tuesday.

The move demonstrates the group's firm commitment to the Chinese market as it has continued to ramp up investment in the country in recent years. The acquisition would better enable DBS Securities China to tap into the Group's resources to improve the capital market services it provides, according to the group.

This year, other foreign financial institutions, especially securities firms, have also increased their presence in the country as China steadily promotes the all-round institutional opening up of the market, deepens the interconnectivity of domestic and foreign markets, and supports more foreign institutions to invest here.

Standard Chartered Securities China Limited officially commenced its business earlier this year. So far, the company has obtained the regulatory approvals to provide custody-related services of securities investment funds, participate in the Bond Connect Scheme between the Chinese mainland and Hong Kong, and joined the Wealth Management Connect Pilot Scheme in the Guangdong-Hong Kong-Macao Greater Bay Area.

China's financial industry has continued to open both in width and depth, which provides sustainable development opportunities for the company to expand businesses in the Chinese market, according to Jean Lu, CEO of Standard Chartered China.

BNP Paribas officially set up its securities branch in China this July and became the fourth approved wholly foreign-owned securities firm in the country. Another banking conglomerate Morgan Stanley also saw its securities branch in China obtain approvals to add securities investment consulting services into its business scope in the market this March.

The establishment of wholly foreign-owned securities firms and the expansion of foreign financial institutions' business scope reflect the strong appeal of the Chinese market, which is continuously optimizing policies to enhance the convenience for medium and long-term foreign capital investments, said Chen Li, chief economist of Chuancai Securities.

The country has started to implement revised rules for qualified foreign institutional investors, or QFII and RMB QFII, since late August, with key revisions such as simplifying business registration procedures, and optimizing the management of accounts and cross-border fund flows.

Earlier this month, it released revised rules on foreign investors' strategic investment in listed companies, allowing foreign natural persons to make strategic investment in listed companies. The country has also called for the steady promotion of the opening-up of the futures market in a set of guidelines released in October.

According to official data from the China Securities Regulatory Commission, the number of qualified foreign institutional investors had expanded to almost 858 by Nov. 9, with more than 40 foreign investors being granted QFII status this year.

As the Chinese economy continues to grow steadily and the structure continues to optimize, industry insiders believe that foreign financial institutions will further increase their holdings of RMB assets in the future.

The advancing opening up in China's financial market will provide diversified investment channels for foreign capital, while the strengthening global influence of RMB makes it an important choice for investors to allocate the assets in their investment portfolios, said Tian Lihui, head of the Institute of Finance and Development at Nankai University.