Financial sector opening-up efforts get solid backing from global investors

Financial sector opening-up efforts are set to gain momentum in China on the back of resolute regulatory pushes and the sustained confidence of global financial institutions on market prospects, experts said on Monday.

There have already been clear indications that China is committed to that cause after the China Securities Regulatory Commission, the nation's top securities regulator, said on Friday that it would allow 100 percent foreign ownership in securities firms from April 1. The move is in line with the requirements of the nation's financial opening-up agenda and the phase-one economic and trade agreement between China and the United States. It came after a recent top-level meeting vowed to further open the financial sector and other services sectors to foreign investment.

The moves have reaffirmed China's determination on further opening financial sector despite the testing times and boosted the confidence of foreign financial institutions in the Chinese market, said Thomas Cheong, senior vice-president of Principal Financial Group, a US-based global investment manager. "We have been paying close attention to whether the epidemic would affect the progress of the financial sector opening-up policy," Cheong said.

"As for the reiterated opening-up, at the current moment, we believe that it reflects the determination and sincerity of the Chinese authorities," he said, adding that he hopes to see concrete implementation measures for the announced policies.

Officials and experts have referred to 2020 as the key year for the financial sector opening-up, partly as foreign ownership caps on life insurance and futures joint ventures were both removed from Jan 1, while mutual funds and securities industries are expected to follow suit on April 1.

Before the statement from the top leadership, financial regulators had been making efforts in putting financial opening-up policies into place "without a pause" during the epidemic, according to the People's Bank of China, the central bank.

The central bank has released a guideline on the intensified efforts to build Shanghai into an international financial hub on Feb 14, and approved the application of Master-Card to set up a domestic bank card clearing institution on Feb 11, PBOC Vice-Governor Chen Yulu said in a recent news briefing.

Last month, US-based Russell Investments' wholly-owned venture completed the registration procedures to become a private fund manager on the mainland, whereas alternative investment manager Oaktree Capital Management registered with local authorities to establish a wholly-owned subsidiary in Beijing.

"The epidemic has not swayed China's preset pace in financial sector opening-up, nor have foreign financial institutions changed their schedule of entering the Chinese market," said Zhang Xiaotao, dean of the School of International Economics and Trade at the Central University of Finance and Economics in Beijing.

"The global spread of the coronavirus is indeed a short-term blow to the market, but both the authorities and foreign investors have shown confidence in China's financial sector opening-up, boosting mid and long-term prospects," Zhang said.

The fast-growing and vast domestic financial market and a more transparent and fair competition environment will make the Chinese market attractive to foreign capital in the next several years, Zhang said.

"We have strengthened our resolve to continue to grow our business in China," said Cheong, citing that he was deeply impressed by the strong cohesion, execution and humanistic care the Chinese government and the company's business partners have shown in the past two months.

Daisy Ho, president of the Chinese operations at Fidelity International, said the global asset manager's long-term business plan and commitment to China remains unchanged despite the epidemic, and the company is proactively applying for a mutual fund license.

"China's asset management market is expected to grow more than fourfold over the next 10 years… We are committed to bringing global best practices and enhancing the financial wellness of Chinese citizens," Ho said.

Apart from Fidelity, asset management giants BlackRock and Neuberger Berman have also declared goals of establishing mutual fund subsidiaries in China.

French bank Societe Generale has disclosed plans to establish a wholly-owned securities venture in China, while Goldman Sachs and JPMorgan said they hoped to increase stake in Chinese securities ventures to 100 percent in the next several years.

"We will continue to provide high-quality financial services to our clients, and work together with our employees, clients and local communities alike for the ultimate victory in the battle against the epidemic," said Lily Zou, president of JPMorgan Chase Bank (China) Co Ltd.

Xue Hongyan, associate dean of the Suning Institute of Finance, said the novel coronavirus outbreak will dampen cross-border investments tentatively, but the pace of foreign institutions expanding investment in China may bounce back to normal in the second half of the year.

Li Xiang contributed to this story.