Rules set to be eased on outbound investment

A view of the China (Shanghai) Pilot Free Trade Zone. Qualified individuals will be allowed to set up free trade accounts within the FTZ. [Photo / Xinhua]

Residents of Shanghai will be permitted to open individual free trade accounts for direct outbound investment within the China (Shanghai) Pilot Free Trade Zone, the Financial Times newspaper said on Monday, quoting Shanghai Party chief Han Zheng.

The paper said the move is part of the efforts to provide greater freedom in overseas investments and said the pilot program may start next year.

Qualified individuals will be allowed to set up free trade accounts within the FTZ, which will enable Chinese investors to put their money in overseas stocks, bonds and real estate, according to Han.

Qualified individuals within the free trade zone will be allowed to open capital accounts in a gradual and orderly manner, on condition of good risk control, said Han.

Currently the major outbound investment channel for domestic investors is the Qualified Domestic Institutional Investor program. The program, which started in 2006, enables domestic investors to buy overseas stocks and bonds through mutual funds.

Earlier this year, officials of the FTZ said some lenders within the FTZ had already helped their individual clients open free trade accounts.

However, many functions of the accounts could not be realized due to lack of supporting facilities and detailed policies.

Zheng Yang, director of the Shanghai Financial Services Office, said at a news conference on Saturday that the FTZ will further strengthen the free trade accounting unit business.

"The schedule for these programs has not been made, but policies and guidance for the programs may be introduced by the end of 2014," said Zheng.

He said more efforts need to be done to get more participants from non-banking sectors - brokerages and insurance firms - to start free trade accounts. Qualified individuals within the FTZ will be allowed to make two-way investments in domestic and overseas stock and futures markets in future.

Overseas institutions will also be able to invest in Shanghai's stock and futures market through free trade accounts within the FTZ, said Zheng.