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Economy

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China's securities market has great potential in attracting foreign investors, PBOC official

April 15, 2019


Abstract : As the renminbi-denominated assets are increasingly included in global indices, the potential for foreign portfolio investment into China is rising and reached a record high of 120 billion U.S. dollars last year, according to Chen Yulu, deputy governor of

BEIJING, April 15 (Xinhua) -- As the renminbi-denominated assets are increasingly included in global indices, the potential for foreign portfolio investment into China is rising and reached a record high of 120 billion U.S. dollars last year, according to Chen Yulu, deputy governor of the People's Bank of China (PBOC), in a statement to a meeting of the International Monetary and Financial Committee (IMFC) in Washington.

Statistics of the State Administration of Foreign Exchange (SAFE) show that, in recent years, overseas institutions have continuously increased their holdings of China's bonds and listed stocks, with their holdings increasing from 219.2 billion U.S. dollars at the end of 2014 to 444.8 billion U.S. dollars at the end of 2018, an increase of 103 percent.

To be specific, their holdings of China's listed stocks increased from 110.7 billion U.S. dollars to 181 billion US dollars during the period, an increase of 64 percent.

According to Bloomberg, at the end of February 2019, China's stock market value (about 6.7 trillion U.S. dollars) ranked second in the world, following the U.S. stock market with a value of 30 trillion U.S. dollars. Japan's stock market (about 5.73 trillion U.S. dollars) ranked third.

Compared with the securities markets of other major countries, the proportion of the foreign investment in China's securities market is still low, implying there is much room for improvement in the future.

A report on China's balance of payments in 2018 shows that from the perspective of the stock market data at the end of 2018, the proportion of the shares held by foreign investors in the U.S. stock market was 15 percent, while that in Japan, Brazil, and the Republic of Korea (ROK) was 30 percent, 21 percent and 33 percent, respectively. It is worth noting that the proportion in China's stock market was only 3.5 percent.

Analysts point out that it is foreseeable that in the future, China's securities market will still have great potential in attracting foreign investors.

They believe that on the one hand, China's economy has generally maintained a stable trend, with its relatively fast economic growth rate in the world, good sovereign credit, and relatively stable exchange rate, laying a foundation for the sound development of the securities market.

On the other hand, the financial services in China's securities market are more complete, amid the increasing convenience for foreign investment. For example, in 2018, foreign investors had a net purchase of China's bonds and stocks in the amount of 139.2 billion U.S. dollars, an increase of 73 percent year on year.

In addition, Chen also noted that the Chinese economy has been "generally stable" with the stock market showing signs of bottoming out and recovering. (Edited by Hu Pingchao, hupingchao@xinhua.org)


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