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China: capital market openness is the new normal

 

The essential

We believe China’s capital market openness is becoming the new normal. Those investors who underestimate the speed and the scale of the opening up of China’s capital market will either lose out or be poorly positioned during the next stage of the global capital market’s development, due to both the size of the current Chinese equity and bond markets, and the potential improvement in their quality of products, regulations, etc.

The Northbound Bond Connect programme is strategically important for three reasons 1. Global central banks will increase Chinese bond holdings after the Renminbi is included in the SDR; 2. The “One belt one Road” scheme needs diversified financing sources; 3. Foreign participation in onshore Chinese bond markets will help improve the quality and standard of Chinese bond markets over the long term.

Including A-shares in the MSCI is also both symbolic and historic. Contrary to investors’ worries, it will only speed up the much-needed reform of the Chinese equity markets.

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July/August 2017

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Juillet/Août 2017

 

The Article

L'Article

Mo JI, Amundi Hong Kong Chief Economist
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China: capital market openness is the new normal
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