Tuesday, January 15, 2013

China Considers Hiking Investment Quota for Foreigners

China's securities watchdog is considering substantially raising the quota that foreign institutions are allowed to invest in the country's stock markets, the agency's head said Monday, the latest signal from Beijing of plans to open the Chinese capital markets.

The comments by Guo Shuqing, chairman of the China Securities Regulatory Commission, follow earlier announcements aimed at easing rules for foreign investors. In April, the regulator raised the quota allotted to outside investors under the Qualified Foreign Institutional Investor program, known as QFII, to $80 billion from $30 billion.

Guo said that the money invested by foreigners in China's stock and bond market accounts "at the moment" for 1.5 percent to 1.6 percent of the total.

"So I think at least we can increase it 10 times, nine times," Guo said at a conference in Hong Kong, without elaborating further.

Stock markets in China are largely out of bounds for foreign investors because of tight capital controls. Guo said Beijing's "long-term policy" was to open capital markets.

Guo's comments come amid China's transition to a new set of leaders, whom many are watching for signs of reform.

He said that while China doesn't lack for capital, authorities want to develop more "open and inclusive" capital markets.

"Our goal is to make it easier for non-residents to issue or trade securities in domestic markets," Guo said. "We will further increase the investment quota, reduce investment restrictions and lower the investment threshold for QFII and RQFII schemes."

The QFII program is the main way through which overseas investors can get direct access to China's stock markets while the RQFII program allows Hong Kong-based units of Chinese financial companies to invest in securities denominated in China's currency, the renminbi.

? Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Source: http://www.moneynews.com/Markets/China-Foreign-Investment-stocks/2013/01/14/id/471274

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