Institutional investors held 40 percent of all shares traded in
China as of last week.
Tu Guangshao, vice chairman of the China Securities Regulatory
Commission, said on Saturday the trend is pleasing.
"The rise of institutional investors is very positive to improve
the structure of China's capital markets," Tu said at a press
conference in Beijing.
China encourages participation by institutional investors to
help reduce volatility in the stockmarket, Bloomberg News
reported.
The government will allow the nation's fund managers, social
security funds, insurance firms and select overseas investors to
increase their holdings, Xinhua news agency reported on December 3,
citing CSRC chairman Shang Fulin.
"The stockmarket is healthy in the medium and long term, but in
the short term investors are still largely small investors, and
they can easily get valuation ahead of itself," Fang Xinghai,
deputy director for financial services for Shanghai's municipal
government, said in an interview last week.
Overseas investors will play an increasingly important role in
China's stockmarket, Tu said.
The government has approved US$9 billion worth of investment
from abroad since it opened the A sharemarket to foreign investors
in 2003 under the qualified foreign institutional investor
program.
Tu declined to comment on the possible merger of
foreign-currency B shares with local-currency stocks.
(Shanghai Daily January 15, 2007)