The China Securities Regulatory Commission (CSRC) yesterday
released a detailed explanation of its recently issued rules on
qualified foreign institutional investors (QFIIs).
Along with the People's Bank of China and the State
Administration of Foreign Exchange, the CSRC last month issued a
new administrative rule on investments made by QFIIs. The CSRC said
that the new rule is aimed at lowering the threshold to allow more
QFIIs to enter China's capital market in accordance with the
country's commitment to further open up its financial sector.
According to earlier restrictions, QFIIs investing in Chinese
securities had a capital lock-up period of as long as one-year, and
one QFII could only establish one securities investment account and
hire one securities firm as its transaction agent.
With the new rule, the capital lock-up period for pension funds,
insurance companies and mutual funds has been cut to three
months.
"In order to encourage long-term investment in the securities
market, the rule lowered the standards for institutional investors,
including fund management companies and insurance companies
managing long-term fund assets," the CSRC said yesterday.
"The new rule will attract more fund management companies, which
have a more conservative investment strategy compared to securities
firms, to enter China's capital market by loosening restrictions in
certain aspects," said Zuo Xiaolei, chief economist at Galaxy
Securities.
The rule also allows QFIIs to establish their own investment
account if the fund they manage is for a long-term investment.
(China Daily September 28, 2006)