China's foreign exchange authority will raise the investment
quotas of qualified foreign institutional investors (QFII) by US$10
billion accompanied by the maximum investment for a single QFII,
which will top US$1 billion from the current US$800 million,
Monday's Economic Observer reports.
The quota increase, still under review by the State
Administration of Foreign Exchange (SAFE) and China Securities
Regulatory Commission (CSRC), has not been finalized although new
regulating policies governing QFII investment are set to be
released, according to the newspaper.
As it stands, the SAFE has granted investment quotas totaling
US$9.995 billion to 49 qualified foreign institutional investors,
edging close to the ceiling US$10 billion, leaving only?US$5
million?to split between the remaining three registered
QFIIs.
SAFE director Hu Xiaolian, speaking on the sidelines of the
current parliamentary session in Beijing, announced
that the Chinese government was mulling over raising the quota
imposed on foreign investment within the RMB-denominated securities
business.
The Chinese government has taken a cautious approach towards
increasing the QFII investment quotas, since the relevant investors
have borne the brunt of the blame for speculating on RMB
appreciation with the domestic market awash with capital.
Statistics show that the total market value of QFII-owned
A-shares?totals 97.1 billion yuan, making them the second
largest institutional investor after public offerings on the
A-share market.
The report also addresses the manner of QFII investment,
highlighting that?much of it had entered the A-share market
via A-share funds, a source the issuance and popularity of which
have helped raise the image and reputation of China's capital
market.
The QFII program was originally started in 2003 to allow foreign
institutional investors such as UBS and Deutsche Bank to enter the
Chinese mainland's securities business.
(Xinhua News Agency March 13, 2007)