1970-01-01 08:33:27
China's securities watchdog released Wednesday a document that authorizes Qualified Domestic Institutional Investor (QDII) including fund management companies, securities companies and custody banks to invest in overseas securities business.
Fund management companies with net assets of more than 200 million yuan and more than two years of operation experience and securities companies which have net assets of more than 800 million yuan and more than one year of collectively entrusted investment management operations may apply, said the document issued by the China Securities Regulatory Commission (CSRC).
The measure will take effect on July 5, according to the CSRC.
"The threshold for QDIIs interested in overseas securities market is relatively high because we want to make a good start," said Li Zhengqiang, vice director of the CSRC's fund department.
Li said ten to 20 fund management companies would meet the requirements in the short run.
The vice director said the commission issued the document to protect QDIIs' interests, bolster investors' confidence, cultivate domestic assets management institutions and intensify their ability to manage cross-market assets.
"This means that China has formally opened the door for domestic institutional investors to invest in overseas securities market," said Dr. Su Qihan with Hua An Fund Management Co. Ltd., adding that fund management companies have been looking forward to the move for quite some time.
Su said that compared with the regulations on banks which hold QDII status, the new document eliminated the 50-percent limit on stock investment and introduced more diversified financial products.
The China Banking Regulatory Commission (CBRC) issued regulations earlier this year requiring qualified banks to invest up to 50 percent of their overseas investment in stocks.
The investment quota was not specified in the just released document. The State Administration of Foreign Exchange will offer the quota after investment institutions go through relevant procedures, said Li.
The vice director expected that there would be more than enough quotas for QDIIs.
The CSRC would organize experts to examine the composition, evaluation, and risk control measures of QDIIs' investment products, although it is not prescribed in the document on product types, said Li.
QDIIs are allowed to employ overseas investment advisors. This would help them "grow rapidly in the short term", said Li.
The new regulations would help reduce excessive liquidity and ease RMB appreciation pressure and help reduce the price gap between A shares and H shares, said Cheng Weiqing, vice president of CITIC Holdings.
Source: Xinhua