China embraces financial opening away from Xi-Trump glare

[BEIJING] China announced a number of steps over the weekend that take the country closer to the promised opening of its financial markets, away from the glare of the high-stakes meeting where Presidents Xi Jinping and Donald Trump called a truce in their trade war.

The moves came quietly and were largely expected, but sent a clear signal that reforming and internationalising China's US$40 trillion financial sector remains a priority for policymakers. Financial opening had been a sticking point with Mr Trump, who's accused China of being a one-sided beneficiary of global commerce.

UBS Group AG late on Friday became the first global firm to win approval from Chinese regulators to gain control of a local securities joint venture after sweeping financial opening measures were begun last year. Competitors such as JPMorgan Chase & Co and Nomura Holdings Inc are also seeking approval to take 51 per cent stakes in onshore securities ventures

Huatai Securities Co got the green light to list depositary receipts on the London Stock Exchange, making it the first Chinese firm to obtain permission to issue shares through the stock-trading link between LSE and the Shanghai Stock Exchange that's expected to start in coming weeks

Chinese authorities issued final rules allowing its banks, which are among the world's largest, to expand in the asset management business. Banks' wealth management units can invest up to 20 per cent of their own funds into products issued by themselves

Policymakers also eased margin requirements for stock futures trading, reversing a clampdown imposed in 2015

"It's not unusual for China to use key inflection points in bilateral and multilateral engagement to announce new liberalizations at home," said Jake Parker, vice-president of China operations at the US-China Business Council in Beijing.

Markets cheered when they reopened Monday. A Bloomberg Intelligence gauge of brokerages was set for its biggest gain since Oct 30 and the main equity index rose with the yuan.

Pressure from the US and other countries seems to be pushing China to open up quicker than policy makers probably envisioned a year ago, said Andrew Polk, co-founder of Beijing-based research firm Trivium China.

"The accelerated pace of financial opening is the one big China story that most people are missing right now."

BLOOMBERG