Chinese financial officials have started a global roadshow topersuade foreigners to invest in the country’s stock market, ahighly unusual move that reflects concerns that investors areturning their backs on China as its economy slows.
Officials from the Shanghai and Shenzhen stock exchanges are touring Europe, the US and Japanto meet institutional investors, according to three people briefed on the program.
The attempt to drum up interest in China’s markets is a remarkable U-turn from just a couple ofyears ago when Beijing restricted overseas investors under a strict quota system, worried theywould swamp China with cash.
Foreign institutions were allowed to invest a combined total of no more than $30bn in China’scapital markets until April this year when the limit was lifted to $80bn. The securities regulatorhoped the higher ceiling would lead to a big jump in applications from investors, but it has beensurprised by the relative quiet, according to a government adviser.
“They think it is mainly because of the global economic slowdown, but they also think that China’sown growth prospects are having an impact,” he said. Even before the economy’s currentslowdown, Chinese shares had been among the world’s worst investments.
The Shanghai Composite Index, the country’s main stock index, dropped 14 per cent in 2010 and 23 per cent in 2011. It has retreated a further 6 per cent this year.
Foreign investors and analysts say that a big part of the problem is that China’s stock marketoperates like a rigged casino, with rampant insider trading and weak corporate governance. GuoShuqing, who was appointed China’s chief securities regulator late last year, has set out to reformthe country’s markets.