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The Asian Financial Forum is held in Hong Kong, south China, Jan. 14, 2013.
(Xinhua/Wong Pun Keung)
China will increase nine to ten times the quota of Renminbi Qualified Foreign Institutional Investors (RQFII) in 2013, Guo Shuqing, head of China's top security watchdog said on Monday in Hong Kong.
All financial institutions with qualification in areas of portfolio investment, wealth management and so on should be qualified to invest in the mainland market, such as purchasing stakes at Chinese-listed stocks or bonds, said Guo during his opening speech at the Asia Financial Forum.
In aspect of China's security market, QVII and RQVII investments only accounted for 1.5% to 1.6% of total A-share volume and is expected to boost to a stake of 8% and 9%, according to Guo, Chairman of the Chinese Securities Regulatory Commission.
He was also positive about opening capital account for foreign individual investors, said domestic institutions should make schemes that accessible to non-residents, citing India as an example supporting individual investment.
In November 2012, China's security regulator released plan to lift quota for RQFII scheme, as the original limit of 80 billion yuan was reached. In response to the rising demand and request from Hong Kong authorities, the commission added another 50 billion U.S. dollar quota for QFII and 250 billion yuan quota for RQFII.
Guo, who is regarded as a savvy strategist and market reformer, said the government is responding to investor's demand and gradually opening up Chinese capital accounts such as security market, bond market and Foreign Direct Investment (FDI) activities.
Security boards are loosening direct controls on listings and shift focus from company's profitability to behavior and operation, he said. Exchange agencies also reduced transaction fees and in general, trading financial products in China is 40% cheaper than before.
"We encourage two-way foreign FDI and also welcome two-way balanced portfolio investment," said Guo: "Our goal is to make it easier for non-residents to issue or trade securities in domestic market."
Guo Shuqing, chairman of China Securities Regulatory Commission, speaks during
the Asian Financial Forum in Hong Kong, south China, Jan. 14, 2013. (Xinhua/Wong
Pun Keung)
Potential of Red Chip stocks
China's capital market, to some extent, is very open and the level of development maybe under-estimated, said Guo. More than 1,000 companies, many of which are Small and Medium-sized Enterprise(SMEs) are listed in other countries during last year, and more than 15% of shareholders in Chinese-listed companies are actually from overseas, he added.
He said in the Mainland market, the IPO demand from SMEs are rising and the queue amounted to 900 by the end of 2012. He encouraged more foreign-listed SMEs, which also named "Red-chip" stocks or stocks sells "China concept", which help to channel assets from oversea market.
Collaboration with Hong Kong
Last year, the collaboration between Hong Kong and the Chinese mainland will reach a new step, according to the Chairman.
Hong Kong investors are multiplying their participation in mainland markets, as government setting up pilot scheme converting A share to foreign currency traded B share. More Mainland IPOs and Dim Sum bonds - RMB denominated bonds are seen in Hong Kong's capital market.
Guo said that in future, Hong Kong investors may be able to hold stake in joint venture in the Mainland's securities, futures and especially in the domestic wealth management institutions.
