Global investors double down on China's ETF market amid economic optimism
The image shows stock exchanges trade data and financial investments./CFP
The image shows stock exchanges trade data and financial investments./CFP

The image shows stock exchanges trade data and financial investments./CFP

Foreign investment institutions are making strategic entries into the Chinese Exchange-Traded Funds (ETFs) market, signaling strong confidence in the country's economic prospects.

Major players like Swiss lender UBS and UK banking giant Barclays have been named among the biggest investors in two newly launched ETFs in China.

Regulatory filings in late September disclosed that UBS has secured the position of the second-largest stakeholder in the Huaxia CSI Hong Kong Stock Connect Mainland Financial ETF, holding shares worth approximately 20 million yuan ($2.73 million), which represents 9.57 percent of the fund.

Barclays Bank took a substantial position in the Bosera SSE STAR Market 100 ETF, acquiring approximately 10 million yuan worth of shares, which amounts to 0.38 percent of the ETF following its September 15 listing.

The trend underscores a broader pattern of deepening foreign engagement in China's financial markets, supported by a series of upward adjustments in China's GDP growth forecasts for 2023 by leading financial institutions.

JP Morgan, Citigroup, and Nomura have all lifted their GDP growth predictions for China this year, with increases to 5.3 percent, 5.2 percent, and 5.1 percent respectively, following the release of economic performance data for the first three quarters by the National Bureau of Statistics.

With China's progressive market liberalization and regulatory approval for international firms to expand operations, the A-share market's allure for global investors is strengthening, potentially ushering in a new era of investment in the region, experts said.

The Standard Chartered Bank (Hong Kong) Limited's application to set up a wholly-owned securities company in China with an investment of 1.05 billion yuan has been granted in-principle approval, making it the first foreign-owned securities firm approved by the CSRC.

Morgan Stanley, Fidelity International, and Neuberger Berman also increased the registered capital of their wholly-owned mutual fund subsidiaries in China by 350 million yuan, 30 million yuan, and 94 million yuan, respectively, this year.

"Since 2018, over fifty measures have been implemented to liberalize financial sectors, and continuous efforts to align domestic market rules with international standards have strengthened global market confidence.," Li Jiange, secretary-general of the Global Asset Management Forum, told China Securities Journal.

The China Securities Regulatory Commission (CSRC) has reaffirmed its commitment to a high-level opening up of the securities and funds sector when deploying the mission objectives for the year's second half, aiming to attract renowned international players to either start operations in China or expand their existing ones.

In light of China's sustained push for openness at a high level, industry insiders anticipate an influx of top-tier foreign institutions to the Chinese market, potentially bringing in a stable stream of medium to long-term investments.

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