Deal to use S&P's index for products

CHINA Southern Fund Management Co said yesterday that it has signed an agreement with Standard & Poor's to launch overseas investment products based on a key index provided by the United States company.

China Southern Fund said that it will become the exclusive Chinese fund house to develop asset-management products that track the benchmark Standard & Poor's 500 stock index, it said in a statement on its Website.

The products will allow mainland investors to gain access to a range of US-listed blue chips including Exxon Mobil, Microsoft Corp, Wal-Mart Stores and IBM, the statement said.

China unveiled a Qualified Domestic Institutional Investor, or QDII, scheme in 2006 for financial institutions to help individuals invest in overseas equity markets. So far, about US$40 billion of QDII funds have been launched.

Major stock indexes in overseas markets including the S&P 500, have more than halved from their highs as the global financial crisis took a bigger toll on the world's economies late last year.

"As the global financial crisis has crippled overseas stock markets, it seems a good time for Chinese investors to look abroad for bargains," said Luo Qunli, an Orient Securities trader. "But investors should take a long-term view and not expect a quick return as it may take a long time for foreign markets to recover."

China Southern also said that it will develop customized QDII products for large institutional clients and wealthy individuals.