China should study South Korea's management of the QFII (Qualified Foreign Institutional Investors) system as part of an effort to gradually realize a free capital market, according to Professor Hu Ruyin, director of the Research Center under the Shanghai Stock Exchange.
Qualified Foreign Institutional Investors (QFII) are the foreign institutional investors that are approved by regulatory authorities to invest directly in the domestic stock market.
Hu claimed China should accelerate structural reforms of share-issuing companies to ensure that only the best enterprises from home and abroad list on the stock market. And, he added, QFII regulations that restrict the investment activities of listed companies should be loosened step by step.
Any changes to the QFII system should be consistent with the reform and development of the security market as a whole, Hu said. The basic system should be established with stipulations that are identical with international practice, he added.
Hu also noted that the quality of the market should be improved at the same time as QFII is relaxed, a process which would include improvements in market supervision, operation of listed companies, management of corporations and so on.
(China Daily October 19, 2001)
