(Yicai) Oct. 22 -- Foreign investment only accounts for between 3 percent and 4 percent of China’s stock and bond markets and, with the support of many favorable factors, there is still great potential for growth, the deputy administrator of the State Administration of Foreign Exchange told Yicai at a press conference.

Overseas investment in Chinese yuan-denominated assets has been improving steadily in the last few years, Li Hongyan said. The yield of yuan bonds has been relatively high since the beginning of the year, attracting foreign investors to buy more yuan bonds. Overseas investors now hold more than USD640 billion worth of yuan bonds, an all-time high, he added.

Since the rally of the mainland’s stock markets in the past month, the purchase of Chinese stocks by foreign capital has increased and foreign investors have become more willing to allocate yuan assets.

China has been steadily opening up its financial markets to the outside world in recent years through initiatives such as the Shanghai and Shenzhen stock and bond connect schemes, whereby mainland investors can buy stocks and bonds on the Hong Kong and other linked bourses, as well as the China Inter-bank Bond Market program.

Foreign investment in yuan assets helps diversify the participants in the mainland stock markets, boosts market liquidity and promotes the international development of China’s capital market, Li said. The State Administration of Foreign Exchange will continue to facilitate investment, create a favorable investment environment, promote high-level financial opening-up and actively support foreign investors’ participation in the country’s stock and bond markets.

Editor: Kim Taylor