CSRC eases account restrictions

The China Securities Regulatory Commission (CSRC) will allow residents of Hong Kong, Taiwan and Macao living on the mainland to open A-share trading accounts, the commission announced Saturday.

According to rules set to take effect on April 1, residents of these three regions will be subject to the same standards and regulations that currently apply to their mainland counterparts when it comes to opening and managing exchange accounts to transact renminbi-denominated shares, provided they show their travel permits, resident identification cards and temporary residence registration certificates to relevant authorities, according to statements made by China Securities Deposit and Clearing Corporation.

The move is aimed at facilitating access to mainland equities and promoting the development of the domestic stock market, according to the CSRC. There are currently around 450,000 Hongkongers, Macanese and Taiwanese living on the mainland, according to data from the 2010 national census.

Individual investors from these regions have only been allowed to take positions in the mainland's B-share markets where shares are denominated in the US dollar or Hong Kong dollar.

"This is just the latest step for mainland's securities regulators as they hope to bring long-term capital into the equity market," Zhang Xin, an analyst from Guotai Junan Securities, told the Global Times.

In recent months, Chinese exchange authorities have introduced several new measures to stimulate the mainland's sagging stock market, such as increasing capital quotas for overseas institutional investors. Meanwhile, the CSRC has also been intensifying scrutiny of companies seeking initial public offerings (IPOs) in what many see as a campaign to inspire confidence in the mainland's scandal-tainted exchanges. Of the over 800 companies in line for a public float on mainland bourses, 27 have seen their IPO applications rejected through the year-to-date as of Thursday, CSRC data show.

Zhang cautioned though that the results of this new policy could be more muted than some now expect. "These rules may fail to attract many qualified investors from Hong Kong, Taiwan and Macao, as most of those interested in investing in the A-share markets have already found ways to do so, such as buying products available under the Qualified Foreign Institutional Investor scheme," Zhang said.