Investment Updates News
- Regulators to expand overseas investment
Date: 24-Dec-2007 Sources: (Shenzhen Daily)
REGULATORS said Saturday the government would expand investment in overseas capital markets next year, and as part of this, it would allow certain financial institutions to invest clients' money in markets probably including Germany and Japan.
Wei Benhua, deputy head of the State Administration of Foreign Exchange (SAFE), said the regulator would give residents more freedom to invest overseas as part of its working plan for next year.
Wei, speaking at a financial forum in Beijing discussing China's economic growth and security, didn't elaborate on the plan.
But it likely includes a program under which residents on the mainland will be allowed to invest directly into stocks traded in Hong Kong. The program has been delayed for months largely due to concerns that it may hurt the domestic stock markets.
Wei also said next year SAFE would continue to strengthen the supervision and management of cross-border fund flows while continuing to improve the yuan exchange rate mechanism. He also didn't elaborate on that statement.
Meanwhile, an official with the banking regulator said the government was considering allowing domestic financial institutions to invest into more overseas capital markets including Germany and Japan under the qualified domestic institutional investor (QDII) program.
Li Fu'an, head of the China Banking Regulatory Commission's innovation supervision coordination department, said the government would continue to expand the QDII program next year and had been investigating a few countries right now.
Li made the comments to reporters on the sidelines of the forum.
Last week, the China Banking Regulatory Commission said it was allowing domestic banks to invest their clients' funds in the U.K. stock market under an agreement with U.K. regulators.
The move marked a significant expansion of the QDII program, which until then had been limited mainly to investments only in Hong Kong.
The QDII program, initiated last year, allows domestic banks, fund managers and insurers to invest in securities abroad up to set quotas. The program is viewed as an important way for China to let capital flow out of its borders to address its large balance of payments surpluses and the resulting influx of liquidity.
The regulator also agreed in principle with its U.S. counterpart to sign a similar pact that would allow domestic commercial banks to offer QDII products targeted at U.S. securities to their clients.
Under current regulations, banks can only invest in countries with regulators that have signed a memorandum of understanding with the China Banking Regulatory Commission.
In another development, Wei said China Investment Corp., the country's US$200 billion sovereign wealth fund, should chase high returns while it should also prepare for potential risks.
Wei said China needed to 'actively?join in discussions in setting the rules for the global sovereign wealth funds.
China objected to any investment and financial protectionism, Wei said.
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