Bloomberg published a lengthy article today, finally analyzing why China is tightening restrictions on overseas stock trading, citing a large outflow of illegal funds, with the US and Hong Kong stocks being the most affected areas.

The article points out that many investors use an annual $50k foreign exchange quota for tourism or studying abroad purposes, and after exchanging currency, transfer the money to apps like Futu or Tiger to buy overseas stocks.

For larger amounts, some use over-the-counter transactions, handing over RMB to intermediaries domestically, who then have someone overseas give them the corresponding foreign currency.

Additionally, there is a method of buying Hong Kong insurance, such as purchasing Hong Kong insurance with RMB and then surrendering the policy to receive a refund in foreign currency.

Therefore, this wave of regulatory tightening is not just about restricting account opening as speculated by the media, but involves the entire business chain, and this is just the beginning.

CITIC Securities estimates that mainland investors hold approximately 200 to 250 billion Hong Kong dollars worth of Hong Kong assets through Futu and Tiger, meaning China is not only cracking down on cross-border brokerages but also systematically tightening mainland capital flows.

In the future, gray channels for offshore stock trading will remain under high pressure. #WTI原油失守90美元