Funds and brokers to invest abroad

WATCH VIDEOSource: CCTV.com

06-21-2007 10:32

China's stock regulator says it will now allow fund managers and brokers to invest in overseas securities. The move is a bid to expand the business now dominated by banks.



The new rules take effect on July 5. Qualified fund firms should operate for at least two years with net assets of at least 200 million yuan. Client capital under management must amount to no less than 20 billion yuan by the end of the last quarter.



Under the new rules, brokers can apply to do the business if they have a minimum 800 million yuan in net capital, which should account for at least 70 percent of net assets. Potential brokerages should also have operated an asset-management business for at least one year, with funds worth two billion yuan by the end of the last quarter.



China last year launched a Qualified Domestic Institutional Investor, or QDII scheme, which enables its financial institutions to help investors trade stocks abroad in a move to slow growth in foreign-exchange reserves. Banks were granted permission in May.



Analysts say the move will largely boost the scale of the QDII program and will add a new revenue channel to brokers and funds. In the long term, it will help ease liquidity pressures on the domestic market.



Hong Kong stocks gained substantially on the news on Wednesday. The China Enterprises Index of H shares set a fourth straight record. Analysts believe expectations of QDII fund flows are giving investors a psychological boost.







Editor:Li Yang
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