As of September 2018, qualified foreign individual investors are authorized to open securities accounts to invest in the Chinese stock market and trade A-shares.
Foreigners living and working in China have first-hand information about the Chinese capital market. This has prompted many to try to invest in the stock market. Previously, strict restrictions were imposed on foreign investors. As of September 15, 2018, the China Securities Regulatory Commission had lifted these with the intention to further open the financial market of Mainland China. Thus, certain foreign investors, such as non-citizens working in the country and those employed by mainland-listed companies can trade A-shares. Of course, some limitations prevail, such as eligible investors must originate from countries whose securities regulators have agreed to partner the China Securities Regulatory Commission (CSRC). These partners include 62 countries and territories as of August 16, 2018 (some of these being the United States, Australia, Singapore, Russia, the United Kingdom, Japan, Malaysia, France, Germany, Brazil, and many more).
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Stocks known as A-shares are traded in yuan on the mainland stock exchanges in Shanghai and Shenzhen. Similarly, stocks traded in foreign currencies are known as B-shares. The channel through which foreigners can buy A-shares is called the Qualified Foreign Institutional Investors Programme (QFII) and it provides access to 3560 companies listed on both Shanghai and Shenzhen exchanges.
Would you like to see if you’re eligible for the stock market and how the process works? Keep reading!
Are you eligible for the stock market?
Under the new regulations as of September 15, 2018, foreigners matching the following criteria can set up A-share trading accounts:
- Foreigners with a permanent China residence card;
- Foreign employees of listed A-share companies who currently live in China or abroad, as long as participating in the company’s equity incentives;
- Foreigners working in China, regardless of whether they have obtained a permanent residence ID card or not.
- Foreigners who have established foreign-invested joint-stock companies in China which are listed on the A-share market.
As mentioned earlier, the eligible foreign investors must originate from one of the 62 countries that have signed the regulatory cooperative agreements with the CSRC. The number or qualified investors is estimated to be several hundred thousand of individuals.
Is your country cooperating with China?
The cooperating countries can easily be checked online. You or the agencies you entrust can log on to the official website of the China Securities Regulatory Commission here. Under the “Home-International Affairs-Regulatory Cooperation” column, you can find all the necessary info regarding CSRC partnerships. Look for lists of MOUs signed between the CSRC and overseas authorities!
Curious about how to open an A-share account? Continue reading this article to get an answer!
How to open an A-share securities account?
What if you can’t apply in person? Say, you’re a foreign employee of an A-share listed firm and participate in their equity benefit program but work abroad.
Fear not, you can still open an account by providing some additional materials:
Prepare the documents below:
- “Application Form for Securities Account Opening”;
- Foreign passport, permanent residence, and photocopies of these;
- Employment certificate issued by the domestic institution (see Annex 1);
- Business-license of the institution or a copy of the unified social-credit code certificate (all need to be officially stamped);
- Tax payment certificate.
A foreign employee of an A-share listed firm, who participates in their equity benefit program, but is working abroad, and thus can’t come to apply in person, can still open an account by providing some additional materials:
- A copy of the valid identification document of the foreign incentive object (with the official seal of the listed company);
- A copy of the business license of the listed company. Additionally, a legal representative certificate, a copy of the legal representative’s ID card, and a power of attorney from the legal representative to the agent. All these materials must be stamped with the official seal of the listed company;
- Valid identification documents and photocopies of the agents;
- Proof that the investor is the object of the equity incentive plan. For example, this can be the incentive plan approval document issued by the listed company and the proof of the incentive plan object (with the official seal of the listed company);
- The self-discipline management commitment letter of the securities account signed by the incentive object (see Annex 2;
- If entrusting others to act on their behalf, they must also provide a proxy letter. Moreover, the agent’s valid identification document and photocopy are needed, both notarized by the notary organ.
Annex 1: The employment certificate issued by the domestic institution (click to zoom in)
Annex 2: The self-discipline management commitment letter of the securities account (click to zoom in)
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