Securities regulator visits US to invite foreign A-share investors

(ECNS) - China's top securities regulator is in talks with 30 large global institutional investors in the U.S. to convince them to enter the Chinese market and absorb A-shares into major global indices, including the MSCI and the FTSE, Caixin.com reported Wednesday.

Qi Bin, director of the International Affairs Department of the China Securities Regulatory Commission (CSRC), said as much during a speech at Harvard University.

Qi says large foreign institutional investors still have doubts regarding the Chinese market, and many of them have declined the CSRC's invitation, but that the CSRC will have continued contact with them.

China will be more motivated for reforms if foreign institutional investors are more "committed" to the Chinese market, and investors will be more willing to enter the country if reforms are accelerated, Qi adds.

China's GDP is 60 percent of the U.S.'s, but its market capitalization is just 25 percent of the US market. The A-share market capitalization to GDP is 49 percent. The combined B-share and H-share ratio is just 81 percent, but the ratio is nearly 150 percent for both the U.S. and India, Caixin.com says.

China has the potential to become the world's largest capital market and still has much room to grow, Qi says.

The CSRC will try to attract long-term overseas capital to improve China's market structure and encourage the development of domestic institutional investors, such as mutual funds and pension funds, he says.

According to Qi, major plans the CSRC has made for 2015 include: deepening the "Stock Connect" cooperation between Shanghai and Hong Kong; pushing ahead with the Shenzhen-Hong Kong Stock Connect trial; seeking inclusion of A-shares into the MSCI and FTSE indices; expanding QFII, QDII, and RQFII programs; and improving risk supervision systems for entry and exit of foreign capital.