Chinese regulators are tightening their fight against capital flight from the country
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Today, October 12th, is knownThe China Securities Regulatory Commission (CSRC) has issued an order prohibiting local brokerage firms and their overseas affiliates from opening new accounts for mainland Chinese clients to trade offshore securities and other assets. It also ordered the cessation of all related marketing and promotional activities to mainland Chinese investors and the closure of other offshore trading channels, including websites and mobile applications. It is reported that the order was issued on September 28.
Analysts believe that in this way the Chinese authorities are tightening their fight against the withdrawal of capital from the country amid a slowdown in economic recovery and a depreciation of the yuan, forcing investors to look for more profitable markets for trading. According to Bloombergin August alone, capital outflow from the country amounted to $49 billion, which was a record high since December 2015.
“This mandate makes clear the regulators’ intentions regarding the scope of cross-border brokerage bans,” said Bloomberg Intelligence analyst Sharni Vaughn. “Broadly speaking, authorities want local investors to use official channels such as Stock Connect. securities through the Shanghai and Hong Kong stock exchanges.— “Kommersant”), and not offshore accounts, which the regulator considers unlicensed and illegal.”
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