Spark Global Limited reports:
One piece of good news for individual investors. Ye Haisheng, director of the SAFE’s capital department, said in an article in China Foreign Exchange that the bureau is studying the feasibility of allowing domestic individuals to invest up to $50,000 a year in overseas securities and insurance.
This “orderly relaxation of business restrictions under the individual capital account” policy proposition, detonated on the same day in the stock brokerage stocks. In U.S. trading, brokerage stocks Haichuan Securities rose more than 30 percent at one point, Tiger Securities and Fortune Securities rose more than 13 percent. This shows that investors’ expectations for the policy are very high.
What is the point of sending out this policy message at this point?
Shao Yu, chief economist of Orient Securities, said in an interview with Time Finance on February 20 that the policy aims to balance the influx of hot money, especially US dollar hot money, so residents are considering easing restrictions on overseas investment. “There are actually two different groups of people coming in and out of here. Most of the money coming in is hot money invested by institutions. But after the opening up, the needs of ordinary residents will be more obvious.”
Xie Yaxuan team of China Merchants macroscopic believes that the long-term significance of the policy is to improve the convertibility of RMB capital account and facilitate the rational allocation of assets by household sectors globally. The short-term significance lies in that if individuals are allowed to invest in overseas securities and insurance within the $50,000 facilitation quota, it will be marginally conducive to increasing the demand for foreign exchange purchase, improving the supply and demand situation in the foreign exchange market, and easing the pressure of RMB appreciation.
How much impact does the policy have on individual investors once the intent is clear?
Many trading rules are different in the Chinese and US markets, and the key to making money depends on one’s ability, a senior foreign exchange analyst told Time Finance on Monday. “There are a lot of financial derivatives instruments in the US stock market that are unfamiliar to Chinese retail investors. Rushing into the US stock market is like fighting with others with millet and rifles. It is not certain that you can make money in others’ territory.”
Second, the policy is still in the research stage, which means it is still warming up. “Even after the policy is opened, it will take quite a while for investors to open an account, understand the market and then enter the market. “Just like starting consumption, unlike production, which is a centralized decision, consumption is a decentralized decision that spreads across individuals and moves a little more slowly.” “The analyst said.
Similarly, Xie Yaxuan’s team also believes that the implementation of the policy is expected to have little impact on the stock market and foreign exchange market. This judgment is mainly based on the fact that individuals who are capable and willing to invest in foreign securities have already made foreign investment through QDII, Lujiitong and other channels, and there will not be a blowout of foreign investment after the policy relaxation.
And another topic of concern is whether the opening of overseas investment will lead to domestic capital outflow.
The senior currency analyst believes that although we haven’t seen concrete policy planning, it is highly likely that some curbs will be introduced by then. “For example, funds that are allowed to be invested abroad will be locked up in specific stock accounts and not allowed to be used for other purposes; Whether the $50,000 quota can be used entirely or only partially to invest in cross-border securities; Whether the money earned by the investment can be returned the original way, or must be all back. These need to be studied further.”
Xie Yaxuan’s team also pointed out that the policy did not increase the quota of individual foreign exchange purchase of $50,000, and the right to limit the amount was still reserved.
Overall, although the relevant policies are still in the stage of research and exploration, but no matter how grand the narrative, corresponding to the investment still need to be cautious. “There’s a lot of liquidity, there’s a lot of money out there, and when things are going up, there’s a lot of storytellers out there, but it’s not as good as it sounds.” “Added the currency analyst.
Reprint indicated source：Spark Global Limited information