China announced on Aug 25 revised rules concerning qualified foreign institutional investors (QFII) in a bid to attract more non-speculative overseas investment for its stock markets.

The new rules, made public by the China Securities Regulatory Commission, come into effect on Sept. 1, 2006.

Slashing the QFII threshold, they make it possible for more overseas foreign institutional investors to qualify as investors in the Chinese A-share markets. The rules stipulate that minimum securities assets managed by a QFII applicant - such as fund management institutions, insurance companies and other institutions that stress long-term investment - are 5 billion U.S. dollars for the current fiscal year, half the earlier QFII provisions.

Insurance companies must exist for at least five years before becoming eligible for QFII, a much shorter period than the 30 years in the current rules. The new rules, which consist of 37 articles in 7 chapters, were publicized on the commission's official website.

The commission said it will also increase the quota of foreign investment in Chinese stock markets. QFII will be allowed to open three securities investment accounts with each of the country's two stock exchanges. Under the existing rules to be scrapped next month, they only had to open one account with each stock exchange in cooperation with their trustees and local partners.

China introduced the QFII system four years ago, making it possible for overseas investors to invest in the country's capital market. By the end of July it had approved a total of 7.495 billion U.S. dollars worth of quotas for 45 QFIIs, about three quarters of the current overall maximum of 10 billion US dollars.

Source:佚名