Business Maverick: China Scraps Foreign Investment Limits

Global funds no longer need approvals to purchase quotas to buy Chinese stocks and bonds, the State Administration of Foreign Exchange said in a statement on Tuesday. It removed the $300 billion overall cap on overseas purchases of the assets, about two-thirds of which remain unused.

”It is certainly a positive and it underscores the fact that the trade war with the U.S. has a positive effect on China – it is pushing its reform agenda more than expected,” said Adrian Zuercher, head of asset allocation for Asia Pacific at UBS Wealth Management. “We might not see immediate inflows, but the cap was an important roadblock for institutional investors which has now been removed.”

The process of granting overseas investors similar ease of access as local players started in 2000, when China was negotiating entry into the World Trade Organization. It picked up pace last year after U.S. President Donald Trump attacked China as a one-sided beneficiary of global commerce. Separately, the country has allowed foreign banks and insurers to take controlling stakes in their local ventures. UBS Group AG, JPMorgan Chase & Co. and Nomura Holdings Inc.

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