Chinese language - Another US$10b to be added to QFII investment quotas

BIZCHINA / Center

Another US$10b to be added to QFII investment quotas

(Xinhua)
Updated: 2007-03-13 10:11

China's foreign exchange authority will add about 10 billion U.S. dollars
to the investment quotas of qualified foreign institutional investors
(QFII) and raise the maximum investment for a single QFII to one billion
U.S. dollars from 800 million, Monday's Economic Observer reports.

The final plan for the quota increase is still under discussion by the
State Administration of Foreign Exchange (SAFE) and China Securities
Regulatory Commission (CSRC), but the new regulating policies on QFII
investment are set to be issued, according to the newspaper.

The SAFE has granted investment quotas totaling 9.995 billion U.S.
dollars to 49 qualified foreign institutional investors, close to the
ceiling of 10 billion U.S. dollars, with only five million U.S. dollars
left for the remaining three registered QFIIs.

The Chinese government is considering raising the quota imposed on
foreign investment in the RMB-denominated securities business, said Hu
Xiaolian, director of SAFE, on the sidelines of the ongoing parliamentary
session.

The Chinese government has been very cautious in increasing the QFII
investment quotas, as qualified foreign institutional investors have been
largely blamed for speculating on RMB appreciation while the domestic
capital market is abundant in capital.

Statistics show that the market value of A-shares held by all the
qualified foreign institutional investors totals 97.1 billion yuan,
making QFIIs the second largest institutional investor after public
offerings in the A-share market.

The report says that much of the QFII investment entered the A-share
market via A-share funds, the issuance and popularity of which have
substantially improved the image of China's capital market.

The Chinese government launched the QFII program in 2003 to allow foreign
institutional investors such as UBS and Deutsche Bank to engage in the
securities business on the Chinese mainland.

The total investment quota for QFIIs increased from four billion to ten
billion U.S. dollars in September 2005.

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