China Rising: The Door Widens to Investors

The pace with which China is allowing more sophisticated hedging and financial products is creating new opportunities for foreign institutions, who want greater onshore exposure and collateral mobility.

The liberalization of China’s capital markets has accelerated in recent months, making it easier for foreign money to flow in and out through enhanced cross-border trading schemes, abolished investment quotas and an expanded scope of permissible financial products.

Reform-minded regulators there—who see the benefits of adding foreign institutional capital into the country’s retail-oriented ecosystem—have relaxed foreign-exchange rules, allowed new trade types such as stock lending and futures, and indicated that fixed-income repurchase agreements are coming.