Date
23 May 2017
Shen Minggao says Beijing's intervention in the stock market has shaken the confidence of foreign investors but it is unlikely to dampen an ongoing financial reform. Photo: HKEJ
Shen Minggao says Beijing's intervention in the stock market has shaken the confidence of foreign investors but it is unlikely to dampen an ongoing financial reform. Photo: HKEJ

No sign foreign investors are heading for the exits, says banker

Foreign investors are not cashing out of the Chinese stock market despite concerns over Beijing’s intervention, according to an economist.

On the contrary, the proportion of A shares held by foreigners is expected to increase in the long run, Shen Minggao, chief economist for Greater China of Citigroup Inc., was quoted as saying by the Hong Kong Economic Journal.

At present, just 2 percent of Chinese stocks are held by foreign investors compared with 30 percent in developed markets and 20-30 percent in Southeast Asian countries, Shen said.    

He said Beijing’s intervention in the stock market has shaken the confidence of foreign investors but it is unlikely to dampen an ongoing financial reform.

The long-awaited Shenzhen-Hong Kong Stock Connect will be launched as scheduled, with an array of market-friendly measures in the pipeline.

The People’s Bank of China (PBoC) is expected to slash benchmark rates twice more in the next 12 months, Shen said.

Meanwhile, UBS Wealth Management, is forecasting another interest rate in the third the third quarter.

The PBOC has been cutting benchmark rates since November when it slashed the lending rate from 6 percent to 5.6 percent.

Three further quarter percentage-point reductions have brought it to 4.85 percent, according to Bloomberg.

[Chinese version中文版]

– Contact us at [email protected]

VW/JP/RA

Hong Kong Economic Journal

EJI Weekly Newsletter

Please click here to unsubscribe