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- Global Research
- General Research Insights
Accessing Asia
New policies and regulations: What you need to know
- Asian markets continue to open up to overseas investors
- We provide an update on the latest policies and regulations that can help increase market access and boost liquidity
- They cover equities, bonds, rates, FX, and ESG, as well as crypto trading and foreign direct investment
Opening up. What are the next opportunities to access markets in Asia? It’s a question we often get asked by clients – and that’s why we recently wrote a report highlighting key shifts in the changing regulatory landscape. It’s intended as an overview of the projects in multiple markets and asset classes that are in development for the next few years, rather than a comprehensive guide of all current regulations. Highlights include:
Mainland China. The “Connect” initiatives, which started with Stock Connect back in 2014, continue to expand. Swap Connect, which allows Hong Kong and international investors to participate in mainland China’s interbank interest rate swap market, has just been launched. The regulators are now working on Insurance Connect and a plan to expedite the opening up of mainland China’s Treasury bond futures market to overseas investors, including the potential listing of Treasury bond futures on HKEX.
Hong Kong. The settlement of RMB trading in Hong Kong is scheduled to start in late June this year. The HKD-RMB dual counter model will allow investors to trade some Hong Kong-listed shares in either HKD or RMB and help to deepen the liquidity of Hong Kong’s offshore RMB market. Meanwhile, retail trading of cryptocurrencies began at the start of June, boosting ambitions to make the city a hub for virtual assets.
ASEAN. Countries across Southeast Asia are taking steps to deepen their financial markets. In Vietnam, a new IT system expected to be in operation this year should improve trading, clearing and settlement processes. The authorities hope this will strengthen the case for the market to be upgraded from frontier to emerging market status by 2025. Singapore has become a hub for family offices set up by high net worth individuals, and Indonesia has launched two initiatives – a Blueprint for Money Market Development 2025 to accelerate FX and domestic financial market development, and a 2023-27 Indonesian Capital Market Roadmap.
India. India government bonds are on a positive watch list for inclusion in the widely tracked J.P. Morgan EM Bond Index. The next review will take place in September 2023. Inclusion would allow a large slice India’s USD1trn INR bond market to join the index at a weighting of up to 10%, leading to potential inflows of USD20-30bn.
ESG. The pace of change in ESG regulation and policies is accelerating, especially in the area of improving the level of disclosure. For example, in Hong Kong, all listed companies will be required to make climate-related financial disclosures by 2025.
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