China is now ramping up its "opening-up" efforts to give more foreign entities access to its capital markets. As part of its strategy, the country is apparently now accelerating its plans to allow foreign capital to wholly own mutual fund management firms by April 1, 2020, a full year agreed of its original schedule.
The China Securities Regulatory Commission (CSRC) made the announcement on Friday, also announcing the upcoming removal of foreign ownership caps for futures companies and securities firms. The cap will officially be lifted next year on January 1 for futures companies and on December 1 for securities firms.
According to a post on the regulator's website published late last week, it will be individually reviewing all foreign financial institution application submissions. It will first be looking at submissions of foreign entities aiming to establish wholly-owned subsidiaries within the country as well as submissions for raising existing shareholdings for joint ventures.
Economists have stated that the CSRC's acceleration of its plans is a clear sign of China's commitment to opening up its capital markets to the rest of the world. The removal of caps and the increase of accessibility will apparently enhance the country's capital markets to support its rapid economic transformation.
The end result should be a bolstering of cooperation between China and the rest of the world's economies within the financial sector.
The opening up of capital markets to mutual funds will particularly be economically beneficial as it should bolster the supply of such funds in the country. This will end up reducing volatility within the market and provide China's growing middle-income earners more options to manage their wealth.
China initially announced plans to remove restrictions for foreign entities in terms of their taking control of futures companies, management firms, securities firms, and mutual funds last year. It was later followed up by an announcement by the office of the financial stability and development committee under the State Council, which revealed that the restrictions would be lifted by 2020.
Following the easing of the restrictions, several foreign entities have taken advantage of the new policy changes. So far, the CSRC has already approved the applications of several major foreign firms, including JPMorgan and the UBS Group.
Applications submitted by US firm Goldman Sachs and Japanese firm Daiwa Securities are still under review. The aforementioned companies all submitted applications to take full or partial control of their Chinese securities ventures.
Market experts have predicted a rapid expansion in China's financial sectors in the coming years, particularly in the insurance, asset management, and securities sectors.
The policy changes to open up the country's capital markets are also providing foreign financial entities massive opportunities to expand their business and to take advantage of the Asian lucrative market.
