China widens access to financial markets for foreign investors


Nov 6– Nov 10, 2017

China widens access to financial markets for foreign investors

China has specified the measures that will ease or lift foreign investment restrictions in its financial markets. Foreign businesses will be allowed to own up to 51 percent of shares in joint ventures in securities, funds or futures, Vice Finance Minister Zhu Guangyao told a press conference. The cap will be phased out over three years. Restrictions on investment in Chinese banks and financial asset management companies will be removed, Zhu said, elaborating on the consensus reached by China and the United States at a meeting Thursday. After three years, foreign investors will be allowed to own up to 51 percent of shares in joint ventures in life insurance and with the cap removed in five years. Duty on automobiles will be reduced "at an appropriate pace," and restrictions on foreign investment in special and new energy vehicle manufacture will be eased in free trade zones before next June. 

China-Latin America industrial park launched

An industrial park was launched Thursday in southern China's Guangdong province to boost economic ties between China and Latin American countries. The Hengqin China-Latin America Economic and Trade Cooperation Park was set up in Hengqin New Area in the city of Zhuhai, costing 2.5 billion yuan ($378 million). Its services include legal aid, policy research, trade facilitation and e-commerce. Businesses in the park signed 15 cooperation agreements Thursday, according to the park managers. Zhuhai sits in the Guangdong-Hong Kong-Macao Greater Bay Area and works with Macao to boost economic ties with Portuguese-speaking and Spanish-speaking countries. Guangdong is a top foreign trade province in China. Last year, it accounted for one-sixth of China-Latin America trade. Guangdong businesses invested around $1 billion in Latin America in 2016, while investment the other way -- from Latin America to Guangdong -- reached $1.5 billion.

More stability for China's commercial banking assets in 3Q

The quality of China's commercial banking assets has stabilized, with the nonperforming loan (NPL) ratio standing at 1.74 percent at the end of the third quarter this year, the same as the previous quarter's end. While the NPL ratio stayed flat, the balance of nonperforming loans increased by 34.6 billion yuan ($5.21 billion) to 1.67 trillion yuan during the same period, and the balance of special-mention loans, potentially weak loans presenting an unwarranted credit risk, rose by 5.7 billion yuan to 3.42 trillion yuan, according to statistics released by the China Banking Regulatory Commission on Friday. In the meantime, commercial banks continued to strengthen their ability to cover possible loan losses, with their NPL provision coverage ratio going up 3.22 percentage points to 180.39 percent. Net profit growth of commercial banks also remained roughly stable, said China's top banking regulator. Commercial banks posted a 7.4 percent cumulative net profit growth year-on-year, down by 51 basis points from the previous quarter's end, with their cumulative net profits totaling 1.43 trillion yuan as of the end of the third quarter.

Sector Overviews

Top-and bottom-5 performing CITIC securities sectors of this week



Indexes performance (as of Nov 10, 2017)


Market Outlook

China stocks retained momentum on Friday amid heavier volume, as the benchmark index finished higher for the fifth consecutive day this week. Despite the extended pressure on banks and most other names, the structural bullish trend continued as consumer stocks and insurance names surged, underpinning the benchmark index. China plans to ease market access by reducing restrictions on foreign ownership in banks and asset management companies and will reduce tariffs on auto imports, as the government announced at the end of Presiding Trump’s visit.