China should engage in further reforms to open its capital markets and attract more foreign investors by creating a level playing field while allowing more risk-hedging tools in country's market, the head of Asia Securities Industry & Financial Markets Association (ASIFMA) said.
Mark Austen, CEO of ASIFMA, said China's imminent ministry reshuffle added urgency to further reforms, but added Beijing's recent government restructuring could help reduce turf battles between regulators.
"What we're seeing in China is that reforms in the capital markets have a life of their own, because they're really there to essentially fuel economic growth in China, and help deal with issues around deleveraging," Austen told Reuters in an interview, brushing aside fears of major impact of trade war in China's financial deregulation.
A White Paper published on Tuesday by ASIFMA, which represents over 100 global financial institutions, suggested a range of policy changes, including loosening investment quotas and repatriation limits for overseas investors, breaking up Beijing's monopoly on forex trading platforms and introducing more shorting activities.
Austen said global index publisher MSCI's planned inclusion of China's "A-shares" into its emerging market index this year would provide a catalyst for further reforms.
China also has a 20 percent cap on repatriation by foreign investors, under the Qualified Foreign Institutional Investor (QFII) scheme. ASIFMA suggested that it must be lifted to create a level playing field.