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.
(For more biz stories, please visit Industry Updates)