Policy easing to lure QFIIs

Updated: 2012-06-16 09:29

By Chen Jia (China Daily)

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Further policy easing is expected to attract more qualified foreign institutional investors to the mainland market preparing for the complete opening of the capital account, according to the top securities regulator.

The China Securities Regulatory Commission will soon publish revised regulations on qualified foreign institutional investors to accelerate the approval process, lower the requirement standards and expand the investment areas for overseas fund managers.

"It may allow investors under the QFII scheme to invest in China's inter-bank bond market and start the securities margin trading and short-selling business," a CSRC official said at a news conference on Friday.

"We welcome foreign long-term investment funds, such as pension funds and issuance funds, to invest in the A-share market," he said.

The CSRC said it granted new QFII licenses to 172 institutions on June 8.

So far this year, 30 foreign financial institutions have received the quota to expand their business under the QFII scheme.

The top securities regulator approved five licenses in April, compared with eight in March, the highest this year, according to the CSRC.

According to data from the State Administration of Foreign Exchange, 145 qualified foreign institutional investors had received a total investment quota of $27.2 billion by last Friday.

The quota approved this year now is nearly the same as the total quota approved in 2010 and last year, according to SAFE.

Currently, many overseas sovereign wealth funds and pension funds are showing great interest in investing in China, mainly targeting the stock market, the CSRC official said.

During the past 10 years, investments under the QFII scheme were stable, helping boost the domestic capital market in the long-term, through purchasing and holding blue-chips and other shares on the main board, said analysts.

"It also contributes to a completely convertible capital account in the future," said the CSRC official.

Earlier this year, the CSRC expanded the total QFII quota from $30 billion to $80 billion.

As QFII licenses are still limited, many foreign institutional investors expect Chinese authorities to continually expand the quota, according to the CSRC.

The regulator also vowed to develop the wealth management sector and promote the business development of fund management companies in China to allocate more funds into the real economy such as manufacturing and support economic growth.