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China to push financial market reforms in 2010

  • Published 13 Nov 2009

Nov 13 – China is set to ramp up the tempo of its financial reforms in 2010, taking concrete steps toward launching an International Board on the Shanghai Stock Exchange (SSE) and expanding a platform to facilitate the trading of complex derivatives, including ETF products. The moves will mark the start of an intensive implementation phase of Beijing’s plan to turn Shanghai into an international financial centre by 2020.We reaffirm our call (CC June 25th Forbidden City) that the financial centre scheme – which runs in parallel to efforts to internationalise the Renminbi – is set to make considerable progress in the coming five years.

The SSE is also set to launch a new trading platform in the coming weeks that will allow it to increase transaction speeds and provide the technical ability to trade complex derivatives. We think that one of the first products to be launched will be global exchange traded funds (ETF) products that will allow Chinese investors to buy a basket of overseas stocks in a single trade. This would be consistent with the Chinese authorities’ intent to educate its investors with relatively safe overseas products traded in Renminbi in Shanghai before allowing them greater direct access to overseas markets by expanding the Qualified Domestic Institutional Investor (QDII) facility. The launch of the derivatives platform will also enable the launch of futures products based on exchange rates, interest rates, stocks and bonds in coming years.

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