Friday, March 07, 2008

Foreign sovereign fund approved for QFII

A foreign sovereign fund has been approved as a QFII investor, in an effort to bolster qualified overseas institutions’ confidence to invest in China’s equity market for the long term, Hu Xiaolian, head of the State Administration of Foreign Exchange (SAFE), was quoted as saying.

The approval was granted under China’s Qualified Foreign Institutional Investor scheme, Hu said, but she decline to name the agency and give details on the QFII quota.

In December 2007, the QFII quota was expanded from US$10 billion to US$30 billion, in a bid to further open up the country’s capital market to the outside world.

In addition, there was no renewal of the QFII quota over the past three months. As a matter of fact, China had suspended the approval of new QFII investments since last February. Therefore, this approval became the first approval for a new foreign investor in more than a year.

Now, a total of 49 foreign institutions had received QFII licenses, and the market cap of the equity they acquired in China was valued at RMB 200 billion, according to official statistics.

China opened its door to foreign investors to invest in its RMB-denominated A-share market in 2002 under the QFII scheme.

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