Markets May 28

SZSE issues first foreign ownership warnings

Sliding stock markets have been no deterrent to overseas flood of investment into Chinese equities

by Nadeem Xu
SZSE issues first foreigners ownership warnings
The Shenzhen Stock Market.

(ATF) The Shenzhen Stock Exchange has for the first time issued warnings that overseas holdings of Chinese companies were nearing their limit.

The notices were made to investors in Midea Group, Centre Testing International and Suofeiya Home Collection.

Foreign investors held 27.3% of consumer electronics maker Midea's shares, 26.3% of the third-party certification and testing firm's stock, and 26.2% of furniture manufacturer Suofeiya’s equity on May 25, the bourse said in a statement Wednesday. Although the limit is 30%, holdings of 28% will be prohibited.

Chinese markets have continued to attract overseas capital via the Hong Kong Stock Connect programmes amid global volatility caused by the coronavirus crisis. By Wednesday, net inflows reached 20.8 billion yuan ($2.9bn) for May, despite benchmarks on the Shanghai and Shenzhen stock exchanges falling in the past two weeks.

Earlier this year, foreign investors had bought 28% of Foshan-headquartered Midea's stock, which triggered a two-month ban for overseas buyers. When that ended in March, the ratio had dropped to less than 26%.

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