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since the beginning of this year, china's capital market has continued to deepen its high-level opening-up in a complex and changing international environment.

securities times reporters recently interviewed foreign institutions including blackrock, jpmorgan chase, hsbc, citigroup, and fidelity. from international investment banks to the world's top asset management companies, in the face of short-term challenges in the process of transformation and upgrading of the chinese economy, they still maintain their confidence in and long-term investment in the chinese capital market.

"the chinese economy has great potential, vitality and resilience. we have always been very optimistic about the long-term development of the chinese economy and the global attractiveness of rmb assets." an interviewed senior executive of a foreign institution told the securities times reporter.

full of confidence in china's capital market

in the current market environment, some overseas investors have adopted a phased underweight strategy in china's capital market, which has also attracted market attention. how confident are foreign institutions in china's capital market?

in this interview, many foreign institutions said that in the face of a complex and changing external environment, china's capital market has always insisted on deepening reforms and continuously promoting the opening up of institutions, markets, and products. senior executives of many foreign institutions operating in china, including banks, securities companies, and public offerings, all said that they remain optimistic about the long-term prospects of china's capital market.

"overseas investors' views on chinese stocks have been changing. from the fourth quarter of last year to this year, they have experienced an adjustment from underweight to slightly underweight, and recently there has been a small amount of selling due to market fluctuations," said fan hua, head of blackrock china and chairman of blackrock funds, in an interview.

in her opinion, different countries are in different economic development cycles, and investors can achieve risk diversification by choosing assets in different cycles. compared with overseas stocks and bonds, chinese assets have a good diversification effect, providing international funds with effective risk diversification and return enhancement opportunities. fan hua believes that with the increase in positive signals in the chinese market, such as the number of recruitment advertisements, the improvement in year-on-year growth of e-commerce, and the continuous optimization of regulatory policies, more and more investors are willing to increase their holdings of chinese assets.

the long-term healthy development of china's capital market requires continuous efforts to expand the market size and enhance its attractiveness. in fan hua's view, "if the pie is made bigger, the market beta will be considerable, and overseas funds will naturally come in." at the same time, she believes that domestic institutional investors can also actively "go out" and participate in overseas layout, realize the two-way flow of funds, and maintain the long-term healthy development of the market.

fang dongming, head of ubs global financial markets in china, said that the a-share market is undergoing a structural transformation towards "investor-oriented" and will continue to deepen reform and opening up and vigorously promote the entry of medium- and long-term funds into the market. as emphasized in the new "nine national policies", the a-share market has a higher strategic importance. in the long run, a more complete and effective secondary market will also benefit innovative companies and cultivate and expand new quality productivity.

robeco believes that changes in the global macroeconomic environment have a direct impact on capital flows. as market uncertainty intensifies, investors will turn to safer investment channels. the accelerated depreciation of the yen against the us dollar and the weakness of other overseas markets have also driven global capital reallocation, causing some funds to flow into relatively undervalued chinese assets.

in addition, robeco said that the resilience and long-term positive trend of the chinese economy, as well as the government's policy measures to expand domestic demand and improve expectations, still have the potential to attract long-term investors. in terms of specific investment strategies, overseas investors are more concerned about the transformation and upgrading of the chinese economy, especially investment opportunities in emerging fields such as new energy, artificial intelligence, and digital economy.

"investing in china is a strategic decision, and we have full confidence in the chinese market," said robeco. even though the a-share market is relatively sluggish, the institution still raised funds and established two stock fund products in the form of a sponsor.

optimistic about rmb assets

global appeal

securities times reporters observed that against the backdrop of a changing global economic landscape, foreign institutions are firmly optimistic about the long-term development potential of the chinese economy, and in the face of current short-term challenges, their confidence in and investment in the chinese market remain unabated.

lu xuan, president of citi china, president and director of citibank (china), told the securities times that citi has been deeply involved in the chinese market for more than 120 years, with the main service lines being: chinese enterprises "going global", multinational enterprises' business in china, and providing supporting services for domestic and foreign institutional investors to participate in bilateral markets. "we are actively applying for securities and futures licenses, which will further improve our business map in china." he emphasized that the company will continue to play the role of a "bridge" to connect financial services in different markets.

wang yunfeng, president and ceo of hsbc bank (china), pointed out that despite the challenges in the process of transformation and upgrading, china still provides long-term growth opportunities for global companies and investors, and hsbc is also one of the international financial institutions with the largest investment in china.

according to wang yunfeng, in recent years, hsbc has invested tens of billions of yuan in mainland china, including increasing its shareholding in hsbc life insurance and hsbc qianhai securities, and establishing hsbc financial technology and hsbc insurance brokerage. in june this year, hsbc china completed the acquisition of citi's personal wealth management business in mainland china, which once again confirmed hsbc's long-term confidence in the chinese market.

fan hua also pointed out that with the improvement of the capital market mechanism and the reshaping of the ecology, blackrock's development in china will usher in huge opportunities and broad space.

huang xiaoyi, managing director of fidelity international china and general manager of fidelity funds, said that the chinese market has long-term strategic significance for fidelity. the company plans to gradually meet the needs of chinese investors through rich asset allocation capabilities and diversified product lines.

geng lin, ceo of standard chartered securities (china), said that standard chartered securities is very optimistic about china's panda bond market and has personally felt the rising interest of overseas investors in chinese bonds. he believes that as the overseas interest rate cut cycle begins in the future, the attractiveness of the chinese bond market will further increase.

"in the short term, china's economy will inevitably face some challenges as it transforms towards high-quality development and alternates between old and new drivers. however, we always believe that the chinese economy has great potential, vitality and resilience. we have always been very optimistic about the long-term development of the chinese economy and the global attractiveness of rmb assets," said geng lin.

international perspective

bringing into the chinese financial market

"in recent years, china has steadily promoted the high-level opening-up of its financial markets, bringing broader development space for foreign financial institutions and global investors. for example, the lifting of qfii/rqfii investment quota restrictions, bond market interconnection, and cross-border wealth management and swap connects and other opening-up measures have received widespread attention and welcome from international investors." yu xueqin, general manager of jpmorgan securities (china) and head of the securities department, told a securities times reporter.

since china lifted foreign shareholding restrictions on securities, futures and other companies in 2020, foreign institutions have taken advantage of the policy to accelerate their layout in the chinese market.

so far, in the securities sector, there are 11 foreign-controlled securities firms, of which four are wholly foreign-owned, namely goldman sachs (china) securities, jpmorgan securities (china), standard chartered securities, and bnp paribas securities; in addition, foreign securities firms such as citi securities and mizuho securities are also applying for establishment in full swing. in the field of public funds, six wholly foreign-owned public funds, including blackrock funds, fidelity funds, and robeco funds, have been established and started business, and three sino-foreign joint venture public funds, including morgan asset management, have officially been converted into wholly foreign-owned public funds. in the banking sector, the "foreign bank development report in china 2023-2024" released by the china banking association shows that by the end of 2023, a total of banks from 52 countries and regions have established branches in china, and the total number of foreign bank operating institutions has reached 888.

many foreign securities firms' chinese businesses are on track. for example, as the first wholly foreign-owned securities company, jpmorgan securities (china) has achieved three consecutive years of profitability since its official launch in 2020. it has landed projects in ipo, additional issuance, corporate bonds, convertible bonds and m&a consulting, and has become the first foreign securities firm to forward research reports to domestic investors under the hong kong-shenzhen stock connect.

morgan stanley securities has completed eight a-share ipo projects and participated in many m&a projects that introduced high-quality international strategic investors to chinese companies, such as saudi aramco's 24.6 billion yuan acquisition of part of rongsheng petrochemical's shares. in march this year, the company was approved to engage in securities investment consulting and securities proprietary business. "with rich experience accumulated in the international market, foreign investment banks are expected to play their core advantages in cross-border due diligence, professional service process construction, enterprise value mining, and optimization of listed company shareholder structure," said qian jing, general manager of morgan stanley securities.

since the beginning of this year, "new players" have also made continuous progress. for example, standard chartered securities (china) officially started business in march this year and made initial progress in the underwriting of bonds and asset-backed securities (abs); bnp paribas securities was approved in april and established in july, and quickly obtained multiple licenses such as securities brokerage and securities proprietary trading; in june this year, mizuho securities' application for establishment was accepted by the china securities regulatory commission and received regulatory feedback in early september. the active layout of these foreign securities companies shows their long-term confidence and strategic investment in the chinese market.

in the public offering and wealth management sectors, foreign institutions have also continued to leverage their advantages in cross-border asset management, bringing global vision, product application, and investment education experience into the chinese market.

for example, blackrock established the first wholly foreign-owned public fund blackrock fund in china in 2020 and one of the first joint venture financial management companies, blackrock jianxin wealth management, in 2021, and has increased its capital several times in the past few years. currently, blackrock fund has issued a total of 9 public fund products; blackrock jianxin wealth management has eight series of 110 public funds and 1 private wealth management products (surviving).

fidelity obtained a wholly foreign-owned mutual fund license at the end of 2022, and officially started mutual fund business in february 2023, and has successfully issued a number of stock and bond funds. neuberger berman obtained a mutual fund business license in november 2022, and has successfully raised 8 mutual fund products in the past two years, including the first green bond fund of a foreign-owned mutual fund.

wang yunfeng pointed out that with the continuous advancement of china's high-level opening-up of the financial industry, the convenience of cross-border investment and financing will continue to improve in the future, attracting more foreign investors to participate in china's financial market.

facing the challenge

expect more policy support

it is worth noting that, at present, many foreign-funded institutions still face many challenges in doing business in china, such as high business costs, high thresholds for applying for business licenses, and difficulty in attracting long-term funds. these problems have, to a certain extent, restricted the foreign-funded institutions from leveraging their strengths.

wang ge, general manager of dbs securities, pointed out that the characteristics of foreign-funded securities firms are that they are both independent legal entities and part of the entire multinational group. therefore, their way of survival is to make full use of the group's strength in cross-border services, and the synergy of group resources is their core competitiveness. therefore, in terms of license application, it is hoped that the group's relevant product experience and comprehensive strength will be taken into consideration, so as to effectively coordinate and give play to the group's product and resource advantages and provide customers with high-quality comprehensive financial services.

fan hua also mentioned that in the current market environment, investors generally have a low risk appetite and it is difficult to attract long-term funds. she hopes that as the market improves, the money-making effect will gradually emerge, attracting investors to make more diversified and long-term investment arrangements.

looking ahead, foreign institutions still have a positive attitude towards the chinese market. many foreign executives said that a good business environment is the key to encouraging foreign capital to increase its long-term investment in china.

huang xiaoyi pointed out that from the perspective of foreign participants in the public offering industry, it is hoped that, under the premise of ensuring the stability of china's financial system, further exploration of regulatory methods in line with international standards can be carried out, especially in the setting of business qualification thresholds, more consideration can be given to the history, scale and experience of foreign institutions in the world. "we look forward to receiving some policy support in the fields of pension management, cross-border investment, investment research sharing, etc., to bring more diversified investment options to domestic investors."

yu xueqin believes that it is necessary to encourage various long-term asset managers such as pension funds to enter the market, and to attract more overseas investors including hedge funds and insurance companies to participate in the chinese market. these measures will help to further increase the market's trading volume, liquidity and vitality, while also giving full play to the role of various professional investors as market "stabilizers" to a certain extent.