The Chinese mainland will let its commercial banks invest in UK
stocks and funds in the first expansion of the country's
international investment program outside Hong Kong.
The nation reached an agreement with the UK financial regulator
for investments by the banks under the qualified domestic
institutional investor, or QDII, program, the China Banking
Regulatory Commission said on its website yesterday.
The government is loosening restrictions on overseas investment
to counter inflows from a record trade surplus that have driven up
local stock and property prices, Bloomberg News said. The mainland
will "soon" come to a similar agreement with the United States
authorities, the regulator said.
"Expanding the number of markets that QDII funds can invest in
helps raise banks' investment and risk management capacities, and
also helps investors diversify their risk," the statement said,
without providing further details.
The release didn't say when QDII funds can start investing in
the UK.
The mainland is prodding QDII fund managers to invest in
"mature" foreign markets to spread risk, and encourages individuals
to draw upon the expertise of institutional investors, said Li
Fu'an, who oversees product innovation at the banking watchdog, in
a speech last Thursday.
"Many Chinese investors are inexperienced with overseas markets
and should go through the QDII program to reap the knowledge of
institutional investors," he said.
Under the QDII program, the country's banks, fund managers and
insurers may purchase products such as overseas equities,
government and corporate bonds, and fixed-income instruments.
The Chinese mainland on August 20 announced a pilot program that
allows people with a Bank of China Ltd account in Tianjin to buy
Hong Kong equities.
(Shanghai Daily December 18, 2007)
