Stocks, Forex and Other Money Matters

Chinese finance institutions with immediate effect, may apply for licenses to invest outside China, said China Securities Regulatory Commission, the nation’s security watchdog.

CSRC said about 20 funds in China meet the standards to be qualified domestic institutional investors (QDII).

Criteria for asset management firms include
* Net assets more than Rmb 200 million (US$26 million)
* More than two years of operational experience

Criteria for brokerages include
* Net assets more than Rmb 800 million
* More than one year of investment management operations

China’s State Administration of Foreign Exchange (SAFE) recently approved a US$20.5 bn QDII quota – US$14.8 bn for 19 banks, US$5.2 bn for four insurance companies and US$500 m for one fund management company.

Hong Kong is favored by most funds from the Chinese mainland as they are more familiar with the market environment there and the risks are comparatively lower, said dealers.

A senior analyst with the Bank of China (Hong Kong) said the QDIIs would attract money into the Hong Kong stock market.

For investors, QDII investments provide diversification options but returns must exceed yuan appreciation to be more attractive than shares listed on China’s stock exchanges.

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