CSRC to speed up QFII approval

Updated: 2011-12-17 11:38


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BEIJING - China's securities regulator said Friday it will speed up the approval of Qualified Foreign Institutional Investors (QFII) to allow more foreign capital into the country's securities markets.

Authorities made the decision because of a recent decline in yuan funds stemming from foreign exchanges and subsiding pressure on the international balance of payments, said an official with the China Securities Regulatory Commission (CSRC) on condition of anonymity.

The country has been worried about excessive foreign capital inflow as it leads to an increase in liquidity and ups inflationary pressure, but the trend seems to have reversed in recent months.

China's total yuan funds outstanding for foreign exchanges decreased by 24.9 billion yuan ($3.8 billion) from September to 25.5 trillion yuan at the end of October, the first month-on-month drop in nearly four years, central bank data shows.

The CSRC official said QFIIs' past market behaviors in China showed they are long-term investors, adding that foreign institutions have kept applying for QFII qualification and shown continuous enthusiasm for China's A-share market.

The value of stocks held by QFIIs accounted for 1.07 percent of the total market value of stocks in circulation as of December 2, the official said.

Chinese shares had fallen for six consecutive trading days before rallying 2.01 percent on Friday, following CSRC Chairman Guo Shuqing's suggestion that China's 2-trillion-yuan pension fund and 200-million-yuan housing fund could be invested in the stock market.

China has so far approved 125 QFIIs from 20 countries and regions, with 106 of them being granted a total investment quota of $21.14 billion, according to the CSRC official.

The total assets of QFIIs amounted to 265.5 billion yuan as of December 2, with bank deposits, stocks and bonds accounting for 12.2 percent, 71.9 percent and 13 percent of the total respectively.