China says illegal outbound investment crackdown wont lead to forced liquidation
June 8 – China’s crackdown on “illegal” cross-border investments will not lead to the closure of mainlanders’ offshore accounts and forced liquidation of assets, the securities regulator said, amid investor concerns about the fate of $54 billion worth of assets.
Following Beijing’s unexpected crackdown on “illegal” cross-border securities trading last month, some mainland Chinese savers are traveling to Hong Kong and trying to explore options to protect their investments in the financial hub.
Banning and sanctioning overseas brokers who “illegally” help Chinese investors buy shares in foreign markets does not affect their overseas business activities, the watchdog said in response to questions from Reuters.
The China Securities Regulatory Commission’s statement is the clearest indication that overseas brokers can continue to provide legitimate offshore services to their mainland clients.
The latest announcement comes amid growing confusion among Chinese investors about how to deal with their money and investments in offshore brokerage accounts, worth about $54 billion, according to Chinese broker Kaiyuan Securities.
Fears of forced liquidations triggered a sell-off in U.S.-listed Chinese stocks immediately after the sanctions were announced on May 22.
“The security of investors’ assets will not be affected by the correction campaign,” CSRC said in its statement. “Existing accounts will not be forcibly closed and assets held in these accounts will not be subject to mandatory cleansing.”
The CSRC said onshore Chinese investors could sell their assets and transfer funds from affected accounts, while brokers would cease providing illegal services, including websites and trading software, on the mainland within two years.
Tiger, Futu and Longbridge have told their onshore Chinese customers that they will no longer be able to open new accounts, add positions or move fresh money from mid-June, but their offshore services will remain intact.
The CSRC said its policy intent was clear; The aim of the crackdown was to “purify” China’s capital markets, protect investors and “hit” illegal capital outflows from the country.
“No country or region will tolerate offshore entities engaging in illegal activities within its borders,” he said, adding that this should be ruthlessly opposed as it “seriously disrupts market order, increases financial risks and harms investors.”
Responding to a Reuters question about whether the tightening of capital controls was also aimed at funneling money into domestic capital markets, the securities watchdog said Chinese assets were “attractive” but did not elaborate.
“We invite both domestic and international investors to participate in China’s capital markets and share the benefits of the country’s high-quality economic growth.”
This article was generated from an automated news agency feed without modifications to the text.
