by SUN Yizhen

Janice Hu sees China's financial market connectivity as one of the most important innovations in global finance, setting a strong example for cross-border investment.

Expanding market access and ensuring a stable flow of foreign trade and investment are key priorities outlined in this year's government work report.

As the first foreign institution to receive Qualified Foreign Institutional Investor (QFII) status, UBS is working toward increasing its stake in UBS Securities to full ownership.

In a recent interview with Jiemian News, Hu, president of UBS China and chairman of UBS Securities, shared her views on China's evolving financial landscape. She highlighted opportunities for foreign institutions in strengthening capital market links, supporting advanced industries, and enhancing financial services. Market depth and liquidity, she noted, remain central to attracting long-term capital, and as the world's second-largest capital market, China continues to build a dynamic investment environment.

Jiemian News: What does the Chinese market mean for UBS? How has the company expanded its presence over the years?

Hu: China is a key market for UBS, and we have been part of its financial sector development for more than 35 years. We were one of the first foreign institutions to enter the country's capital markets and have built a strong presence across multiple business areas.

We have benefited from China's steady opening and have actively contributed to its financial reforms. In 2003, we became the first foreign company to receive QFII status. In 2006, UBS Securities became the first foreign-invested securities firm with a full license. In 2018, we increased our stake in UBS Securities to 51 percent, marking the first foreign firm to gain majority control of a joint-venture brokerage in China. By 2022, our holding had reached 67%, and we are now working to raise it to 100 percent.

Jiemian News: How do you view the progress of China's financial market opening over the years?

Hu: China has taken significant steps in recent years, including removing foreign ownership limits on financial institutions, lifting QFII and RQFII investment quotas, introducing a new Foreign Investment Law, and implementing a "negative list" system for foreign investment. These measures have led to greater access and broader participation in China's markets.

One of the standout developments has been the cross-border trading links between mainland China and international markets. Over the past decade, these connections have played a key role in making China's markets more accessible and integrated. They have broadened the investor base, diversified financial products, and brought onshore and offshore markets closer together.

In terms of trading activity, data from the Hong Kong Stock Exchange shows that in the first three quarters of 2024, daily average turnover in the northbound and southbound trading channels had grown by 21 times and 40 times, respectively, compared to their launch month in 2014.

UBS has played an active role in this evolution. We have steadily expanded our capabilities in cross-border trading, particularly in the northbound channel, where our market share has grown significantly. Since 2017, our daily trading volume through the Hong Kong-Shanghai and Hong Kong-Shenzhen stock links has increased twelvefold. UBS has also been recognized as the most active trading house in this segment for five consecutive years.

Jiemian News: This year's government work report highlights the importance of "high-level opening." What does this mean to UBS?

Hu: The phrase emphasizes a commitment to greater international engagement and a more sophisticated regulatory environment. A recent government action plan also highlights foreign investment as a key driver of economic modernization and industrial advancement.

China's ongoing efforts to refine policies and improve investor protections will strengthen global confidence in the market. For financial firms like ours, this means new opportunities to participate in China's economic transformation.

One key aspect of this opening is regulatory alignment. Over the past year, China has introduced reforms aimed at making its capital markets more transparent and internationally compatible. These efforts, including updates to listing requirements and disclosure rules, are helping create a framework that aligns with global best practices.

Another important aspect is the connection between openness and innovation. Many of China's leading companies in sectors such as electric vehicles, batteries, and renewable energy are expanding internationally. A high level of market access allows capital to flow in both directions—supporting international investors seeking exposure to China while also helping Chinese businesses expand globally.

As a long-term partner in China's financial markets, UBS plays a role in linking international capital with domestic opportunities. At the same time, we help Chinese firms and investors navigate global markets, fostering a two-way exchange of capital and expertise.

Jiemian News: Bringing more foreign financial institutions and long-term capital into China is a key priority. What are the most important factors for achieving this?

Hu: China's commitment to financial market development and reform has created strong momentum for foreign investment. As the world's second-largest economy, the country offers a unique mix of regulatory support and market potential.

A stable and transparent policy environment is essential for long-term investor confidence. In August last year, China introduced a new policy framework aimed at refining market access rules, lowering barriers, and fostering a fair and open investment landscape. This initiative has strengthened confidence among global investors and further supported the high-quality development of the market.

At the same time, liquidity and market depth play a crucial role in attracting long-term capital. In the third quarter of last year, China intensified efforts to boost its capital markets and encourage institutional investment. Since early 2024, insurance funds and pensions have injected around 2.9 trillion yuan ($400 billion) into A-shares, while equity fund assets have expanded to 7.7 trillion yuan. Additionally, the growth of stock-based exchange-traded funds has further enhanced market liquidity. These trends collectively lay a strong foundation for sustained long-term investment.

Jiemian News: What new opportunities do foreign financial firms see as China continues to open its markets?

Hu: The combination of financial market development, sustainability initiatives, and new industrial growth is creating a dynamic environment for foreign institutions.

At UBS, we see major opportunities in cross-border services. We help international investors access China's markets while also supporting Chinese companies and investors seeking global opportunities.

This aligns with two key trends: First, as more Chinese companies expand abroad—whether through manufacturing, acquisitions, or public listings—they require financial expertise to support their global strategies. Second, individual investors are increasingly looking for diversified wealth management and global asset allocation services. These trends present significant opportunities for institutions like ours.

UBS has been involved in China's capital markets for more than a decade through QFII and stock connect programs. We believe China remains one of the most attractive markets for global investors. As more international capital flows into China, we look forward to using our global network to bridge investment opportunities.

We are also seeing growth in capital market activity. UBS recently played a key role in the Hong Kong listing of Mixue Bingcheng, a major IPO this year. These developments reflect China's ongoing integration with the global financial system.