CHINA: China to welcome more Foreign Investors

Thursday June 21 2012

It has been reported that China is to welcome more foreign investors, the Chinese Securities Regulatory Commission has issued draft rules that would lower entry requirements and simplify the approval process for applicants under the Qualified Foreign Institutional Investors program, the primary program for foreign investors to enter China`s capital markets. It also will allow qualified foreign investors to hold more shares in domestically listed companies and enter the country`s interbank bond market.

It has been speculated that the move is aimed at further attracting long-term offshore funds, strengthening confidence in the domestic market and promoting the steady development and opening up of the country`s capital markets that have been notoriously hard for non-natives to penetrate. The proposal follows a string of changes aimed at easing conditions and broadening the investment scope for foreign investors. Comments on the proposal will be accepted until July 5.

According to further reports, China is also to introduce a trial program that would allow banks to turn loans into securities and free up funds for lending in an attempt to bolster growth. The draft rules for foreign investors will lower minimum qualifications for applicants. For foreign fund managers, insurers and pension funds applying for licenses, the minimum requirement for assets under management will be lowered to $500 million from $5 billion, the commission said. For securities companies and commercial banks, the requirement will be lowered to $5 billion from $10 billion.

The securities regulator has also proposed to raise the ceiling on combined stake holdings by qualified foreign investors in any listed company in China`s domestic A-share market to 30% from 20%. The draft rules also proposed allowing qualified investors to invest in the country`s interbank bond market, in which only a small number of them, including foreign central banks, have been granted access.

This information will be updated as more details become available