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Chinese bourses seek foreign capital

By Fang Yunyu (Global Times)

08:19, October 09, 2012

A group of leading Chinese fund companies will head for New York to conduct a two-day US roadshow, the latest effort to boost the weak domestic capital market, sources told the Global Times Monday.

Four Chinese public funds and two Shanghai private equity companies will send their leaders to the US to meet overseas institutional investors in mid-October in New York, to encourage them to invest in China's capital market, a source with direct knowledge of the matter told the Global Times on condition of anonymity.

The participants include China Asset Management Co, Harvest Fund Management, Bosera Asset Management Co, Bank of Communications Schroder Fund Management Co, MagaTrust Investment and Rosefinch Investment, the source said.

Some officials from the country's securities regulator, as well as a few Chinese banks and securities traders will also take part in the US roadshow.

The fund companies mentioned refused to comment on the event. And a spokesman surnamed Lin from Rosefinch did not deny the roadshow but refused to offer more details.

"The US roadshow plan by Chinese funds demonstrates that the current Chinese stock market is too sluggish, and capital flow is strongly needed," Zhou Yu, director of the Research Center of International Finance at the Shanghai Academy of Social Sciences, told the Global Times Monday.

Since the beginning of this year, the mainland stock markets have had the worst performance in the world, with the Shenzhen index declining by 2.69 percent and the Shanghai index dropping by more than 5 percent between January and September, compared with gains in overseas markets including the US, Germany and South Korea.

"If foreign investors are willing to put their money into the Chinese stock market, it would no doubt boost market confidence," said Zhou, noting that the key problem for the Chinese capital market for now is lack of capital as well as fears of a prolonged slowdown in China.

China's economic growth hit a three-year low of 7.6 percent during the second quarter of this year.

It is not the first time for Chinese financial institutions to travel overseas to lure foreign investors.

Last month, officials from the Shanghai and Shenzhen stock exchanges and China Financial Futures Exchange also completed a 10-day global roadshow in some countries, including the US and Canada.

Zhang Yujun, assistant chairman of the China Securities Regulatory Commission (CSRC), announced on September 22 at a forum that the global roadshow by the Chinese bourses has received good feedback, and overseas long-term institutional investors were generally optimistic toward the Chinese market.

Li Daxiao, director of the research institute at Yingda Securities, told the Global Times Monday that previous efforts by authorities to boost the stock market through domestic investors have failed to yield desired results.

"It leaves the authorities no other choice but to turn to foreign investors, who are usually value investors," Li said.

To boost the market, the CSRC has cut the transaction fees of A shares three times this year.

In August, it encouraged companies whose share prices are lower than their net asset value per share to repurchase their own shares.

It issued in July a regulation allowing the combined stake held by the qualified foreign institutional investors (QFIIs) in any company listed on the A-share market to reach up to 30 percent from the previous 20 percent, a move viewed as an effort to make China more attractive and easier for the QFIIs to invest in the country's capital market.

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