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Finance Special: Access to capital market growing for foreign funds

By Li Fusheng in Hong Kong (China Daily) Updated: 2013-01-16 07:27

Finance Special: Access to capital market growing for foreign funds

China will open the door of its capital market much wider to foreign investors, said the country's top securities regulator Guo Shuqing.

"At present, QFII and RQFII investment accounts for around 1.5 percent or 1.6 percent of China's A-share market, so I think at least we can increase it by nine or 10 times," said Guo, president of the China Securities Regulatory Commission, at the sixth Asian Financial Forum, held from Jan 14 to 15 in Hong Kong.

The quota for QFII, short for qualified foreign institutional investment, now stands at $80 billion, while the quota for RQFII, or RMB-denominated QFII, is 270 billion yuan ($43.39 billion), and both have substantially risen since Guo took his current post in October 2011.

Guo said the commission also encourages companies headquartered on the Chinese mainland, especially small and medium-sized ones, to go public in Hong Kong and other overseas markets.

"We have just revised regulations on allowing domestic companies to get listed in overseas markets. We are encouraging more companies to go abroad," Guo said.

Guo said China now has nearly 900 companies listed in other Asian markets.

"In China, the market is not so developed, so we encourage diversified channels for IPOs," Guo said.

Leung Chun-ying, chief executive of the Hong Kong special administrative region, has welcomed companies that intend to do so.

Leung said at the forum that his administration will also "do everything it can to unlock the vast opportunities in the mainland, not just for local businesses but also for businesses from outside of Hong Kong".

The Hong Kong Stock Exchange is among the most active in the world for raising equity funds, and US think tank the Heritage Foundation has named Hong Kong the world's freest economy 19 years in a row, Leung added.

Over the past decade, companies from the mainland have raised $400 billion in Hong Kong, said Jack So, chairman of the Hong Kong Trade Development Council.

As financial hardship continues to plague the eurozone and the US, Asia is attracting more and more investors, said Leung.

"We have seen a notable swing to the East in terms of financial opportunities and talent, with investors eager to be part of Asia's economic growth story," he said.

"I am not just referring to the rapid development of the mainland right here on our doorstep but also to emerging economies, especially in Southeast Asia," Leung said.

In 2012, Asian markets saw a net inflow of $51 billion worth of foreign capital compared to a net outflow of $13 billion in 2011, statistics from Citibank China showed.

The bank, which won the Brand Building Award of Foreign Banks for 2012 at a forum organized by the 21st Business Herald in early November, also predicted in its Jan 3 report that major Asian economies will continue to see vigorous growth in 2013, with China's GDP set to grow by 7.8 percent, and that of India is projected to grow by 6.2 percent. By contrast, developed economies are expected to have an average GDP growth rate of 0.9 percent.

Leung also said that he plans to launch a financial services development council soon "to enhance, elevate and champion the competitive position of Hong Kong as an international financial center and promote the development of our financial services industry".

Through measures in its 12th Five-Year Plan (2011-15), the Chinese government is also backing Hong Kong in its efforts to consolidate its position as an international financial center, Leung said.

(China Daily 01/16/2013 page16)

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