Traveling Investors Prohibited

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Saturday, May 26, 2001, updated at 10:11(GMT+8)

Business

Traveling Investors Prohibited

Chinese authorities in charge of supervising stock market operations have begun examining mainland speculators who organized huge troupes to travel to Hong Kong over May Day holidays ， bringing with them rather large sums of foreign currency， as Beijing Today newspaper reports.

After making healthy profits from B-shares at the Shanghai and Shenzhen Stock Exchanges ， these 800 ‘package tourists’ hoped to make fortunes on theong Kong H-share and Red Chip shares. It is no secret that many securities companies serve as front agents for mainland investors ，buying and selling shares on the Hong Kong exchange， but the agency fee for opening a Hong Kong share account sometimes reaches 5 to 10 million Hong Kong dollars. For lower-end retail investors， traveling to Hong Kong themselves is a better option. These ‘traveling investors ’ typical trading ‘procedures？Hong Kong are simple，too.

In this case， the foreign currency savings of mainland inhabitants（in total，80 billion US dollars）

could have flooded into Hong Kong ， compromising market transparency. The transfer of foreign currency to Hong Kong without a proper permit is illegal under China ‘s foreign exchange administration regulations. Some authorities have adopted strict measures to discourage such investment activities. China Securities Regulatory Commission recently publicized a ban on unlawful agent services for Hong Kong stock trading or account maintenance. Companies involved in these illicit transactions have been urged to end these practices or face severe punishment.

Mainland financial service firms and private businessmen are also prohibited from serving as second-class agents for Hong Kong share investors. Customs departments have begun checking and blocking departing travelers carrying large sums of foreign currency or RMB，in order to crack down on the foreign exchange black market.

But some analysts believe that， besides these severe measures ， the authorities should consider broadening the available channels for investment on the mainland. One approach would be to open up the domestic market to Hong Kong companies by allowing H-shares and Red Chip shares to be issued as domestic A-shares or China advance-trust shares. If this is achieved， then the ‘traveling investor’problem will truly be eliminate.



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	Chinese authorities in charge of supervising stock market operations have begun examining mainland speculators who organized huge troupes to travel to Hong Kong over May Day holidays ， bringing with them rather large sums of foreign currency， as Beijing Today newspaper reports.




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