The China Securities Regulatory Commission (CSRC) ordered domestic brokerages’ overseas units to stop opening new stock accounts for onshore investors to stem capital outflows that have pushed the yuan to a 16-year low.
Offshore units of Chinese brokerages were prohibited to market activities to attract domestic investors, and their websites were banned from showing content promoting new account openings and money wiring. These overseas units were ordered to shut down apps, websites and counters involved in these activities by the end of the month.
The move takes the focus on the increased scrutiny from financial regulators to check the flight of capital that could further weaken the local currency and roil the securities market.
Chinese assets ranging from the yuan currency to stocks have been under pressure despite Beijing’s range of supportive measures to revive growth. These steps have included policy loosening in the property market where mortgage rates have been cut and purchase restrictions scrapped in big cities, and injecting liquidity into the system by cutting banks’ reserve requirement ratios and policy rates.
