Qualified foreign institutional investors (QFII) have turned out to be less speculative than other institutional investors in China, official figures show.

 

QFII tend to keep blue chip stocks they bought for much longer periods, and their investment style is relatively stable, the China Securities Regulatory Commission said.

 

These investors have facilitated the stability of the Chinese stock markets, the commission said.

 

By the end of July it had approved a total of US$7.495 billion worth of quota for 45 such investors, about three quarters of the planned total quota of US$10 billion.

 

China introduced the QFII system four years ago, making it possible for overseas investors to invest in the country's capital market.

 

In 2005, the change-hand rate of the stocks by QFII was 193 percent, much lower than that of investment funds, whose change-hand rate stood at 325 percent, the commission said.

 

Citing figures from stock exchanges, the commission said that last year the change-hand rate of stocks owned by social security funds was 218 percent, the rate of stocks owned by securities firms using capital they pooled from investors reached 520 percent, while the rate of stocks owned by securities firms using their own capital was 360 percent.

 

China announced on Friday revised rules concerning qualified foreign institutional investors, in a bid to attract more non-speculative overseas investment for its stock markets.

 

The new rules, made public by the China Securities Regulatory Commission, come into effect on Sept. 1, 2006.

 

Slashing the QFII threshold, they make it possible for more overseas foreign institutional investors to qualify as investors in the Chinese A-share markets.

 

The rules stipulate that minimum securities assets managed by a QFII applicant - such as fund management institutions, insurance companies and other institutions that stress long-term investment -- are US$5 billion for the current fiscal year, half the earlier QFII provisions.

 

(Xinhua News Agency August 29, 2006)