China set for foreign investor rush

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By Jacob Maslow

Shanghai Stock Exchange
SHANGHAI, CHINA – JUNE 2: Shanghai Stock Exchange closeup on JUNE 2, 2012 in Shanghai, China. It is one of the two stock exchanges and the world’s 5th largest market of $2.3 trillion as of Dec 2011.

The New Year has seen China be quick in drafting new laws that could herald the way for foreign investors to trade more on some of the country’s commodities futures.


Beijing may well be seeing a slowdown in economic growth, but it is not shy in coming forward in trying to assert its dominance on the world stage in global commodity pricing.


It has some of the most liquid commodities futures markets, but foreign investor participation has been restricted by state controls.


Now, however, with the dawn of 2015, the China Securities Regulatory Commission has partially opened the doors with draft guidelines that increase the number of futures contracts to foreign investors.


In a statement, the Commission said the Shanghai Futures Exchange oil futures would be the first contract qualified foreign investors could trade on.


They will be able to participate via approved overseas or local brokerages while consideration will also be considered for direct trading licenses on the bourse.


There has been no further news on opening other domestic futures to foreign involvement.


Foreign investors have very restricted access to China’s commodities markets and are permitted only to trade via brokers once they have set up a locally registered non-financial unit.


Industry experts said the new measures would strengthen the market, bring in foreign players and transform it with international practices.


China is slowly opening up its domestic markets to outside market forces, with the creation of a Shanghai free trade zone and the Shanghai Gold Exchange’s international bourse.


This allows foreigners to invest directly in the country’s gold market using offshore yuan.


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