Foreign investment in stocks relaxed
Print Edition
China has allowed more foreign investment in its stock market in a latest move to free up capital flows and further liberalize its securities market.
Effective from yesterday, investors under the Qualified Foreign Institutional Investor program and the Renminbi Qualified Foreign Institutional Investor scheme are allowed to hold up to 30 percent in a listed company on the Shanghai Stock Exchange. The previous cap was 20 percent.
But a single foreign institution’s investment in a listed firm is still limited to 10 percent, the exchange said in a statement on its website late on Wednesday.
The exchange also expanded the investment scope so that QFII and RQFII investors can trade preferred shares, financial bonds issued by policy banks and asset-backed securities. They are also allowed to participate in when-issued trading of government bonds, or trading in securities that have not yet been issued.
Previously, foreign investors could only invest in stocks, bonds, mutual funds and warrants.
But the move to further open its domestic market to overseas investors may not have an immediate positive effect on stocks, an analyst said.
“It’s unlikely to attract large amount of capital inflows at a time when foreign interest in emerging markets is waning,” said Zhang Jian, analyst with BOC International (China) Ltd.
By the end of February, China had granted US$52.3 billion in quota to QFII firms and 180.4 billion yuan (US$29 billion) to RQFII investors, according to official data.
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