It is the first time when China allowed foreign companies to trade their shares at the mainland exchange markets

Almaty. June 22. Silkroadnews – Central Bank of China for the first time allowed foreign companies to trade their shares at the mainland exchange markets, RBC says.

“It is the first time ever when People’s Bank of China allowed foreign companies to trade their shares at the exchanges of Mainland China – Shenzhen and Shanghai,” the publication notes with reference to the regulator’s 2015 annual report.

Until recently the attempts to allow foreign companies to issue shares for conversion at the “mainland” exchange markets proved unsuccessful, though some progress has been made to open the local bond market for foreign investors.

As explained by the Central Bank official, the foreign companies can now issue bonds in RMB and sell shares in the local markets, and exchange connections between Shenzhen and Hong Kong will be set “as the appropriate moment comes”.

The regulator will also consider the possibility to allow foreigners to issue Chinese Depositary Receipts (tool allowing foreign participants to trade at the local stock exchanges).

Chinese companies have been using the U.S. depositary receipts for participation in trading on the U.S. exchanges for a long time.

RBC reminds, the Renminbi Qualified Foreign Institutional Investor program (RQFII) aimed to attract foreign investors in China is applied in the country since 2011 and allows the foreign investors to buy securities at the stock exchanges in mainland China for yuans purchased in Hong Kong. In 2012 China Securities Regulatory Commission has increased the quota for foreigners from $30 billion to $80 billion. In June 2016 China for the first time granted a quota for purchases of its securities to the U.S. investors. Its volume made $38 billion. On June 17 the head of the research department of the People’s Bank of China Liu Lei said that China will abandon the program “as soon as favorable conditions are provided”.