Over the weekend, the Financial Supervisory Authority (SAFS) made two very big announcements. First, foreign capital can now own 100% of Chinese financial institutions, such as banks and insurance companies. This means that foreign investors have full control over these institutions, which was not possible before.
Second, the negative list for foreign investment in the financial sector has been cleared. What does this mean?
To put it simply, there used to be some business or policies in the financial sector that foreign banks or investors could not participate in, but now these restrictions are gone. In the future, foreign banks in China will be able to enjoy exactly the same policy treatment as domestic banks.
Indeed, some people are worried that the full entry of foreign capital into the mainland's financial sector will bring about an impact, and may even take control of the financial lifeline and affect the safety of our deposits. But in reality, there are two sides to everything, and getting foreign capital in is no exception.
There are many benefits to having foreign capital in. Just like in the past, Jack Ma entered the financial industry, promoted the reform of banks, abolished transfer fees, etc., to benefit consumers.
Similarly, the purpose of allowing foreign capital to enter the financial industry is to enable domestic financial institutions to compete with foreign capital in a real way, thereby improving service levels and efficiency.
Of course, we also need to pay attention to the risks and challenges that may be brought about by the entry of foreign capital. However, this does not mean that we should refuse foreign investment.
After all, the financial industry is the lifeblood of the country, and now it is completely open to foreign capital.
You don't have to worry so much, policymakers must have thought of issues that we ordinary people can think of.
One only has to look at the shareholding of our four major state-owned banks to understand it.
The major shareholders of these banks are Huijin and the Ministry of Finance, and their shareholding ratio is more than half, and some even reach 75%
More attention will be paid to joint-stock banks and local banks with more decentralized shareholding structures.
Due to the wide distribution of shareholdings in such banks, if their operating performance is stable and their profitability is strong, foreign investors may gradually increase their holdings through the stock market to achieve the purpose of controlling shares.
In this case, if the major shareholders of these banks do not want foreign capital to seize control, they need to actively increase their holdings in the stock market to maintain their position, which could lead to a battle for equity.
Historically, cases such as Anbang and Minsheng Bank, Baoneng and Vanke have not only attracted a lot of market attention, but also brought many investment opportunities to small investors.
At present, if we fully relax the restrictions on foreign shareholding in the financial industry, this will undoubtedly inject new vitality into the industry and have a similar impact on the "catfish effect". Companies that are otherwise uncompetitive will face greater pressure to reform, and competition within the industry will intensify.
What do you think about this? Welcome to leave a message to discuss!