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China Embraces Financial Opening Away From Xi-Trump Glare

Bloomberg logoBloomberg 12/3/2018 Bloomberg News
a view of a building: Buildings of Pudong's Lujiazui financial district stand across the Huangpu River in Shanghai, China, on Saturday, June 2, 2018. China's banks, scrambling to adjust to the government's deleveraging campaign, are likely to add to pressures on the corporate bond market as they shed more of their massive note holdings and de-risk their balance sheets.© Bloomberg Buildings of Pudong's Lujiazui financial district stand across the Huangpu River in Shanghai, China, on Saturday, June 2, 2018. China's banks, scrambling to adjust to the government's deleveraging campaign, are likely to add to pressures on the corporate bond market as they shed more of their massive note holdings and de-risk their balance sheets.

(Bloomberg) -- 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 internationalizing China’s $40 trillion financial sector remains a priority for policy makers. Financial opening had been a sticking point with Trump, who’s accused China of being a one-sided beneficiary of global commerce.

Key Moves

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 percent stakes in onshore securities venturesHuatai 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 weeksChinese 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 percent of their own funds into products issued by themselvesPolicy makers 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 U.S.-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 U.S. 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.”

To contact Bloomberg News staff for this story: Lucille Liu in Beijing at xliu621@bloomberg.net

To contact the editors responsible for this story: Sam Mamudi at smamudi@bloomberg.net, Jeanette Rodrigues

For more articles like this, please visit us at bloomberg.com

©2018 Bloomberg L.P.

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