Stocks News
- HK stock investment plan still on track
Date: 16-Nov-2007 Sources: (Shenzhen Daily)
A LANDMARK program to permit mainland residents to invest directly in Hong Kong equities remained on track, Joseph Yam, head of the Hong Kong Monetary Authority, said Thursday.
Yam said all departments of the Central Government supported the plan in principle and were in the process of drafting measures to control the risks that the program entails.
'We've had very fruitful exchanges of views as to where the risks are in terms of these proposals and how the risks should be managed,'Yam said.
He said there was no timetable for the launch of the direct investment program, dubbed 'through train?in the media.
'Now it's only when the risks are identified, and proper risk management measures are put in place, before these proposals can be implemented. We've had very good discussions on that,'Yam said.
The plan is an integral part of China's strategy to encourage private capital outflows in order to relieve upward pressure on the yuan and give people a broader range of investment options.
Under China's capital controls, residents may invest in overseas securities only through designated banks and fund managers. The amount of money that these Qualified Domestic Institutional Investors (QDII) may send abroad is strictly capped.
China's currency regulator, the State Administration of Foreign Exchange (SAFE), announced plans for the direct investment program Aug. 20.
Hong Kong stocks immediately soared in anticipation of a wall of mainland money, but it soon became clear that SAFE had not obtained the final consent of other parts of the government.
Premier Wen Jiabao confirmed Nov. 3 that the plan was on hold pending a review of the risks involved.
Policymakers are variously worried that inexperienced mainland savers could lose money to savvy global investors or that an exodus of mainland cash could undermine support for high-flying domestic shares.
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