China to open up share markets

["Ulhas Joglekar" <joglekarulhas@xxxxxxxxxxx>]

The Economic Times

Wednesday, June 05, 2002

China to open up share markets

REUTERS

SHANGHAI: China will crack open its massive domestic A share markets to
foreign fund managers and brokerages next month, giving them limited access
for the first time to Asia's second largest market by capitalisation.

>From July 1, joint venture asset management firms can trade A shares and
sell their products to domestic investors while Sino-foreign brokerages will
be able to underwrite, but not trade, A shares under rules issued by the
China Securities Regulatory Commission (CSRC) on Tuesday.

"This is good news for the whole securities market because foreign
participation can help raise management and technical standards at Chinese
securities firms," said a fund manager at China Southern Fund Management Co.

"The issuance of rules allow concrete negotiations between foreign and
Chinese firms, such as on shareholding structure."
The long-awaited regulations were in line with draft rules issued by the
regulator in December as China entered the World Trade Organisation.

They helped buoy stock markets as investors hoped Sino-foreign funds would
offer investors more sophisticated products and help attract money from
institutional investors like pension funds and insurance companies into the
markets.

Global fund managers have been keen to get into China, whose shuttered A
share market are capitalised at about $500 billion and have more than 1,100
listed companies. A shares are now closed to foreign investors. China also
has one of the world's highest personal savings rates.

A slew of foreign funds and securities houses have signed partnership
agreements with Chinese counterparts, but no concrete ventures have been
launched because they were waiting for the green light from the government.
"A year ago, this would have been very good news," said Commerzbank's Peter
de Jong. "But enthusiasm has dissipated. The market hasn't done well and the
300 million yuan is not a small amount."

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