Speak softly

31 July 2018 By Christopher Beddor

Plans to ease restrictions on overseas investment in mainland stocks are a welcome respite from trade tensions. But vetting buyers for security risks, as in the U.S., gives officials new clout. China’s recent veto of Qualcomm’s bid for NXP will make investors extra wary.

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China’s Ministry of Commerce on July 30 released proposed changes to rules for foreign investment in mainland stocks. The draft measures would reduce lock-up periods for foreign investors making so-called “strategic investments” in Chinese A-shares via agreements, new share issuance, tender offers and other means. They would also cut the minimum assets that foreign investors must hold or manage in order to qualify for the investments.

The proposed changes would also subject strategic foreign investment applications to national security vetting. The draft rules will be open for public consultation until Aug. 29, according to the announcement.

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