| China to authorize QFII investment in stock-index futures |
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| Thursday,August 16,2007 Posted: 23:46 BJT(46 GMT) |
| From:chinaview Article type:Reproduced |
BEIJING, Aug. 16 (Xinhua) -- The qualified foreign institutional investors (QFII) are soon to be authorized to participate in stock-index futures trading in China, said QFII fund managers.
Ke Shifeng, director of U.K.-based Martin Currie's subsidiary company in China, said one billion U.S. dollars, or 10 percent of the total QFII quota, would be granted for foreign investors to put into the index derivatives market.
Ke said the detailed trading requirements were still unknown, but Martin Currie, with 120 million U.S. dollars in QFII quota in hand, had started preparations.
Chen Jialin, the investment director of the Yangtze Fund, which is mainly sponsored by U.S.-based Colony Capital and Shanghai Industrial Investment, also confirmed the news. The Yangtze Fund had held meetings to discuss measures in response to the awaited policy, said Chen.
But media officials with the regulatory authority China Securities Regulatory Commission declined to comment when contacted by Xinhua.
Opening the stock derivative market to foreign institutional investors would provide them with hedging tools in the A share market, said Fang Shisheng, a senior advisor with Orient Securities.
Under the new policy, "foreign institutional investors can hedge stock-index futures against falls in the stock market as a better way to protect their profits", said Fang.
Ke said if the market plunged, "the only option" under current policies was to sell yuan-denominated shares to avoid losses, which undermined the strategy to hold shares so as to profit from yuan appreciation.
Fang believed that foreign institutional investors would mainly use stock-index futures as a hedging tool. "They will be very cautious, and avoid risky short-selling practices," said Fang.
Chen Changhua, head of the China Research Department for Credit Suisse, said fears of QFII participation in the stock-index futures trade were groundless because the quota largely restricted their influence.
Even with its expansion, the total QFII fund was still below 30billion dollars, a small sum if measured against the Shanghai and Shenzhen bourses with a market value of more than 20 trillion yuan (2.6 trillion U.S. dollars), said Chen.
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