QFII Grows Adult

One can find la crème de la crème among the 103 entities identified as Qualified Foreign Institutional Investors. The acronym QFII is a program launched in 2002 by the Chinese government. It aims, with progressive amendments, to allow foreign investors to trade yuan(Morgan Stanley, Citigroup, Deutsche Bank, Crédit Suisse, Nomura, Barclays, Crédit Agricole, La Compagnie Financière Edmond de Rothschild, etc), sovereign funds (Government of Singapore Investment Corporation, Abu Dhabi Investment Authority, Hong Kong Monetary Authority), private foundations (Bill & Melinda Gates Foundation), asset management companies (Pictet Asset Management, T. Rowe Price, Templeton, Legg Mason, Fidelity), and world-class Universities (Yale, Stanford, Columbia, Harvard). They were all admitted to invest in a quota system with a cumulative ceiling of 30 bn Usd. The QFII program, inspired and controlled by the China Securities Regulatory Commission, marks a noteworthy exception. Before its launch, only Chinese companies were allowed to trade the Rmb-denominated A shares in Mainland China. Conversely, the H shares, from companies incorporated in China, were bought and sold only on the Hong Kong Stock Exchange. As a consequence, many companies float their shares in two different markets at the same time. A shares used to trade at a huge premium over their H share mirrors (an average of 30% in 2008). This was caused by a combination of 2 factors: severe restrictions and a very limited offer, both in China. The excess of liquidity in the country was addressed to few, investible, solid shares, inevitably on the rise. This process was eroded in the last 2 years and now the situation is reversed, with a spread of 6-8% in favour of Hong Kong. The finance’s big players have the intention to play the QFII card, which gives an opportunity to offer better results to the clientele and bigger profits to the stakeholders. Simultaneously, the initiatives marks a strong step of the Chinese markets in its way to modernity. It is a pity to ignore the opportunity, either it is to due to distraction or incompetence.-denominated A shares in Shanghai’s and Shenzhen’s stock exchanges. With the notable exception of Italy, all major countries are in the list. It comprises many prestigious, cash-rich.financial institutions: commercial and merchant banks