QFIIs get futures green light

09:30, July 21, 2010      

Email | Print | Subscribe | Comments | Forum 

China may allow qualified foreign institutional investors (QFII) to use no more than 10 percent of their investment quotas to trade stock index futures, the China Securities Journal reported on Tuesday.

The Chinese securities regulator did not comment directly on the report when contacted by China Daily, but said that the rules will be released for public comment soon after they are issued.

An estimated 12 billion yuan ($1.77 billion) worth of funds from foreign institutions are expected to participate in index futures trading but they will only be allowed to trade for hedging rather than speculative purposes, the report said, citing an unidentified source.

Analysts said that the inflow of foreign capital will help make the stock index futures market more international but the move will have more of a symbolic impact given the relatively small investment quota and the limit on trading purposes.

"Foreign investors' participation in the trading of index futures will bring fresh capital to the market and make it more international. But the initial quota granted to foreign institutions is relatively small so they won't have much competitive advantage over their Chinese peers," said Liao Qing, a Shenzhen-based analyst at Guohai Securities.

The regulator has granted quotas worth about $17.72 billion to 89 QFII funds by the end of June, according to China Securities Journal.

Selected overseas investors are allowed to invest in China's stock markets under the QFII program, which was launched in 2003.

The equity-market reforms represent the government's effort to make more investment options available to foreign investors, who have limited access to the world's third-biggest stock market by value.

The trading of index futures would give foreign investors a hedging tool in China and allow them to more effectively compete with local fund managers as the nation prepares to open the market to foreign institutions.

Stock index futures, or agreements to buy or sell the CSI 300 Index at a preset value, began trading on the China Financial Futures Exchange in Shanghai on April 16.

The regulator may gradually expand investment quotas for foreign investors to trade index futures, according to market watchers. But QFII's participation in the short term is unlikely to cause sharp volatility in the futures or spot markets.

The CSI 300 Index, which tracks 300 large-cap stocks traded in Shanghai and Shenzhen has slid 25 percent in 2010, one of the worst performers among global benchmark gauges.

Bloomberg contributed to the story.

Source:China Daily

(Editor:黄蓓蓓)

  • Do you have anything to say?

双语词典
dictionary

  
Special Coverage
  • Premier Wen Jiabao visits Hungary, Britain, Germany
  • From drought to floods
Major headlines
Editor's Pick
  • Chinese President Hu Jintao watches the launch of Tiangong-1 space lab module at Beijing Aerospace Control Center in Beijing, capital of China, Sept. 29, 2011. Other members of the Standing Committee of the Political Bureau of the Communist Party of China (CPC) Central Committee, including Wu Bangguo, Jia Qinglin, Li Changchun, Xi Jinping, Li Keqiang and Zhou Yongkang, are also present. (Xinhua/Rao Aimin)
  • The graphics shows the launch procedures of the carrier rocket of Tiangong-1 space lab module, Long March-2FT1 on Sept. 29, 2011. (Xinhua/Lu Zhe)
  • Image taken from Beijing Aerospace Control Center shows a Long March-2FT1 carrier rocket loaded with Tiangong-1 unmanned space lab module blasting off from the launch pad at the Jiuquan Satellite Launch Center in northwest China's Gansu Province, Sept. 29, 2011. (Xinhua)
  • On Sept. 28, tourists travel around the Mingshashan Scenic Area in Dunhuang, Gansu province by camel. With the National Day vacation right around the corner, more and more tourists from home and abroad are going to Dunhuang. Riding on a camel, they travel in the desert to enjoy the cities rare form of natural scenery. (Xinhua/Zhang Weixian)
  • Chinese forest armed forces work together with forest firefighters on Sept. 28. (Xinhua/Chai Liren)
  • Photo taken on Sept. 29, 2011 shows strong wind blows trees in Sanya, south China's Hainan Province. Typhoon Nesat heads towards south China and is moving at an average wind speed of 20 km per hour toward the west coast of China's Guangdong Province. (Xinhua/Hou Jiansen)
Hot Forum Discussion