Fang Xinghai: If foreign accounts cause major fluctuations in the stock market, we can suspend its trading
Fang Xinghai, vice chairman of the China Securities Regulatory Commission, stated at the Boao Forum for Asia on April 19 that as of March 31 this year, foreign investment in China's stock market accounted for 5%. As foreign capital continues to enter the Chinese market, it can be seen that the Chinese stock market is more stable than ever. The role of foreign capital in market pricing is increasing, creating conditions for value mining.
Fang Xinghai said: “5% is still relatively low, but the growth rate has been relatively fast in recent years. With the entry of foreign capital, A-shares have operated much more steadily in recent years than before. The reason is that foreign capital is gradually playing a important role in market pricing.” China’s stock market has a lot of value to tap. China’s economy is growing rapidly. Relatively speaking, there is a lack of institutional investors who can tap value. Foreign investment has just made up for this shortcoming.
Regarding "Will the inflow of foreign capital affect the stability of the stock market?" "What about the large inflow and outflow of foreign capital?"
Fang Xinghai said that the China Securities Regulatory Commission attaches great importance to this and will take precautions. There are three main types of foreign investment coming in. One is retail investment. The proportion is small and it will not affect our health and stability. There are also mutual funds, retirement funds, insurance companies, etc., which we welcome very much, and are also the largest percentage of positions held. There is also a form of self-operating through foreign brokerages, behind which are some hedge funds. Such funds are of more concern to us.
He said that in the design of Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect, there are regulations that can stop trading if funds come in and cause large fluctuations. The China Securities Regulatory Commission attaches great importance to safety and will continue to communicate with overseas institutional investors and overseas regulatory authorities, "We are confident in maintaining the stability of the capital market in the process of opening up."
If a certain foreign account fund enters A shares and causes significant market volatility, the China Securities Regulatory Commission will suspend its trading.
In response to regulatory issues regarding the listing of Chinese concept stocks in the United States, Fang Xinghai said on April 19 that the China Securities Regulatory Commission would unswervingly promote China-US financial cooperation. There will also be some problems in cooperation, which are normal. For example, there is an audit and supervision problem in the listing of Chinese concept stocks in the United States. The PCAOB (Accounting Oversight Committee for Listed Companies in the United States) needs to inspect accounting firms. The Securities Regulatory Commission believes that their demands are completely reasonable, the Shanghai Stock Exchange may also usher in the listing of American companies in the future, and they also need to comply with Chinese rules.
It is necessary to find a suitable method for PCAOB to smoothly inspect China's accounting firms, and the inspection process must also meet China's national security requirements. Regarding PCAOB's method of inspecting Chinese accounting firms, the China Securities Regulatory Commission believes that the method provided by China meets the requirements of both parties, but the latest version provided in August last year has not yet received a response from PCAOB. As long as both parties resolve these issues in good faith, a solution can be found to resolve PCAOB's concerns.
In response to the problems in the underwriting mechanism of A-share issuance, Fang Xinghai stated that the China Securities Regulatory Commission has a lot of work that needs to be improved in the issuance. It adheres to the marketization, internationalization and rule of law policy. The relevant rules and details are lacking. The China Securities Regulatory Commission will continue to improve and improve as they work. The major reform of the registration system that is currently being promoted requires further adjustment in some areas. I believe that with the advancement of reforms, good results will be achieved in the integration of our market with foreign countries.