Chinese ADRs rallied in premarket trading Friday. Alibaba, Baidu, Pinduoduo and Li Auto rose 4%; NIO and JD.com rose 3%; XPeng, NetEase and Bilibili rose 6%.
China is considering relaxing the rules that cap foreign ownership in domestic publicly traded firms, people familiar with the matter said, as it seeks to lure global funds back to its $9.4 trillion stock market.
Authorities are pondering policy tweaks to boost overseas ownership in stocks listed in Shanghai, Shenzhen and Beijing as part of a push to open up the market and boost trading, the people said, asking not to be identified as the information is private. China currently caps total foreign ownership in locally listed firms at 30%, and subjects a single foreign shareholder to a 10% limit.
The latest deliberations on foreign ownership are still in an early stage and details, such as which sectors might benefit and where to set new cap limits, haven’t been decided, the people said. While the initial takeup may be slow at a time when investors are concerned about the health of China’s economy, a potential relaxation in the near term also comes with a lower risk of a sudden influx of capital stoking market volatility.