Investor schemes play an important role
By Yi Xianrong (China Daily)Updated: 2006-12-08 14:12
There is the opinion that the authorities may have given too much attention
to the QDII scheme because the quotas granted to QDIIs within months of its
launch have already gone beyond what the QFIIs got in nearly four
years.
This is not the case. As a transitional arrangement during the
reform of an emerging market, schemes such as the QFII usually have a trial
period of two to three years.
The authorities should take a prudent
approach and gradually open up in this period as they make decisions on granting
QFII status, investment quotas, the percentage of shares held by foreign
investors and the limits on capital liquidity.
This is because the
domestic capital market must have time to adapt to the inflow of foreign
capital. And the limits must be loosened inch by inch as the domestic capital
market gradually gets more mature.
The stock market in China is seeing a
new phase of prosperity now that most of the listed companies have finished
liquidizing their untradable shares.
Fundamental systems governing the
securities market are being issued and improved, investor confidence in the
market is being restored and a large number of blue-chip companies are going
public.
With its basic pattern remarkably changed, the country's
securities market will stand on a new starting block. Regulation of the QFII
scheme will be further relaxed when its trial period comes to an end.
The
positive impact of the QFII scheme on the capital market was highlighted when
the CSRC, PBOC and SAFE jointly issued the Administrative Measures on Domestic
Securities Investments by Qualified Foreign Institutional Investors, which came
into effect on September 1.
Judging by the development of the securities
market both in and out of the country, it is inevitable that regulation of the
QFII scheme will be relaxed. It opens the channel between foreign capital and
the A-share market, eases the need for capital and indicates an unprecedented
boom in the domestic securities market.
During this time, the QFIIs will
also change their business modes, their profit modes and their investment
concepts in line with the development of the capital market and the Chinese
economy.
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