China: Yi offers timeline on financial sector liberalisation – Nomura

People’s Bank of China (PBoC) Governor Yi Gang today disclosed more details of the plans for financial sector liberalisation at the Boao Forum and announced a timeline for six measures to be implemented largely by end-June, and five more by year end, notes the research team at Nomura.

Key Quotes

“By end-June: 1) fully remove foreign investment limits on banks and financial asset management companies; 2) lift foreign investment limits to 51% for securities, fund management, futures and life insurance companies, with all limits being removed beyond three years; 3) remove the requirement of at least one local securities company in establishing joint-stock securities companies; 4) expand the current daily quota for Shanghai-Hong Kong Stock Connect flows by four times; 5) open the insurance agency and other insurance businesses to qualified foreign investors; and 6) allow foreign insurance companies the same scope of business as local companies.”

“By year end: 1) encourage foreign investment in the trust, financial leasing, auto financing, consumer financing and other industries; 2) remove foreign investment limits on financial asset investment companies and wealth management companies that have been newly established by commercial banks; 3) significantly extend the business scope of foreign banks; 4) allow joint-stock securities companies the same scope of business as local companies; and 5) remove the requirement to have had a representative office for two years before establishing foreign insurance companies.”

“Governor Yi also said that a Shanghai-London Stock Connect scheme may be established this year, and with regard to ongoing trade tension with the US, confirmed that RMB depreciation would not be used as a tool.”