BOAO, China (Reuters) - Chinese regulators are closely monitoring flows of foreign capital in and out of the country, government officials said on Monday, as overseas interest in Chinese equities grows. Foreign investment in China’s stock markets started to rise rapidly after their shares were included in the MSCI and FTSE indexes, said Fang Xinghai, vice chairman of the China Securities Regulatory Commission (CSRC). The proportion of foreign holdings in Chinese stocks currently stands at 5%, he added in a panel session at the Boao Forum, which Beijing is trying to promote as Asia’s answer to the World Economic Forum in Davos Foreign investors in Chinese listed companies are still subject to a 30% ownership cap and have limited derivatives tools at their disposal in Chinese markets. China has a shortage of mature value investors and foreign investors will fill the gap, said Fang. He added that the CSRC is paying “close attention” to large inflows and outflows of foreign funds in Chinese stock markets and that China would create conditions to attract more foreign investment in equities. The CSRC is confident of keeping China’s capital markets stable as the country opens them up, said Fang, adding that the regulator will take precautionary measures to head off risks and maintain daily quotas on foreign investment. Meanwhile, Xuan Changneng, deputy administrator of the State Administration of Foreign Exchange (SAFE), said on the same panel that SAFE would also keep up regular monitoring of cross-border capital inflows. External factors for China’s currency, the yuan, to appreciate are weakening, he added. The yuan gained more than 6% against the dollar in 2020 as China made a comparatively speedy recovery from the coronavirus outbreak and in January this year hit its strongest level since June 2018 at about 6.42 yuan. The currency is currently trading around 6.51 yuan to the dollar.