Business
July 13, 2005
China to increase six-billion-USD investment quotas for QFII
The securities watchdog in China has promised to add six billion US dollars of investment quotas for qualified foreign institutional investors (QFII), said Tuesday's China Securities Daily.
This decision will expand the country's total investment quotas for QFII to 10 billion US dollars and push forward the abeyant examination of QFII's qualifications.
As the four-billion USD investment quota was used up two months ago, examination and approval for new QFIIs had come to a stop, during which time the State Administration of Foreign Exchange and the China Securities Regulatory Commission conducted a joint evaluation on the performance of all licensed QFIIs and proposed the State Council, China's cabinet, to further expand investment quotas.
In contrast with the massive losses suffered by open-ended funds over the first half of the year, QFIIs have demonstrated a good profitability, said the report.
The Yangtze Fund issued by Belgium-based Fortis Bank, an important QFI in China, reported a 11.48-percent growth in net value by June.
Fortis Haitong Investment Company, the fund's investment advisor, was said to have submitted applications to authorities for an enlarged investment quota.
"The newly added quotas may not satisfy the appetite of QFIIs but will definitely give them an impetus," said Yuan Shuqin, manager of the China Securities Department of the USB AG, which, Yuan said, is seeking to grab investment quotas of 200 to 300 million US dollars.
Researcher Chen Changhua of the Credit Suisse First Boston Corp. said that the increased quotas would not bring much immediate impact on China's stock market.
"It will help QFIIs to spread their investment value that is to purchase stocks of good companies and hold them long enough to share in the corporation's proceeds from growth," he said.
Given that a large number of Chinese individual investors still like to buy and sell their stocks frequently for meager profits, Chen said that the rapid development of QFIIs would bring profound changes to people's investment habits.
Source: Xinhua
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