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China to ease rules on qualified foreign investors

China plans to relax rules on so-called qualified foreign institutional investors, or QFIIs, as part of efforts to widen access to the nation's capital markets, the foreign exchange regulator said yesterday.

China intends to lower the minimum investment requirements for QFIIs and shorten the lockup up period on the shares they purchase, said Zou Lin (鄒林), vice director of the State Administration of Foreign Exchange.

"We have been working on measures to further open the capital markets to overseas investors and hope to fulfill the aim this year," Zou said.

Under the current rules of the QFII program, investors with at least US$10 billion in assets and US$50 million to spend can apply to the securities and foreign exchange regulators for a license to buy yuan shares and bonds, and obtain a quota.

As of Feb. 15, Beijing approved 34 foreign investors to buy a combined US$5.745 billion worth of Chinese securities products.

The QFIIs are currently required to hold on to the stock they buy for no less than one year.

A shorter lockup period for cross-capital movement may lessen speculative flows on the yuan and get closer to international practice, Zou said.

The foreign exchange regulator also plans to expand the scope of investments for funds raised by overseas issuers via domestic yuan-denominated bonds, he said.

Foreign companies may list stocks and depositary receipts on the domestic market under the new policies, Zou said in a report published earlier yesterday in Foreign Exchange magazine, a publication affiliated with the foreign exchange regulator.

The regulator will also make it easier for domestic insurance companies to invest in securities abroad, Zou said.

"We may raise the amount that insurers may invest overseas and help them to realize the investment," he said.
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