Recently, the Financial Affairs Office of the Shenzhen Municipal Committee issued a risk warning, reminding investors to be highly vigilant of the potential risks associated with cross-border investments. Recently, some investors have suffered heavy losses due to insufficient understanding of the risks of cross-border investments and engaging in illegal transactions, or even falling into new scams. Among them, the risk of individuals investing in overseas brokerage accounts is particularly prominent.
The Municipal Finance Office of the Party Committee listed relevant cases to warn investors. Some investors opened margin trading accounts for Hong Kong and US stocks with overseas securities firms and conducted overseas stock trading through apps. However, without the consent of the investors, the securities firms merged the accounts and wrongly transferred the stock data, and lacked daily settlement statements. As a result, the investors suffered significant losses.
In response to this, the Financial Office has specially emphasized that, apart from the compliant mechanisms such as Qualified Domestic Institutional Investors (QDII), “Shanghai-Hong Kong Stock Connect”, and “Shenzhen-Hong Kong Stock Connect”, the behavior of domestic investors participating in overseas securities trading is not protected by domestic laws and regulations. In case of any problems, investors may suffer huge losses. Moreover, the People’s Bank of China has clearly stipulated that personal foreign exchange purchases are mainly used for travel, study abroad, medical treatment, etc. If individuals illegally purchase foreign exchange for overseas securities investment, it is considered an illegal act and may face severe penalties such as fines or restrictions on foreign exchange purchases.
In the complex and volatile financial market environment, although cross-border investment may seem full of opportunities, it actually conceals numerous risks. Investors must fully understand the relevant laws and regulations of cross-border investment and the potential risks, and must not blindly follow the trend. Before making any investment decisions, one should carefully assess one’s own risk tolerance and investment goals. If one intends to participate in cross-border investment, it is recommended to do so through legal and compliant mechanisms such as QDII, “Shanghai-Hong Kong Stock Connect”, and “Shenzhen-Hong Kong Stock Connect”, and choose reputable and authoritative information channels and financial institutions to make rational and wise investment decisions, so as to effectively protect one’s own property safety.
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