The qualified foreign institutional investors
(QFII), having positive impressions upon the ongoing split
share reform, are fully confident about the long-time performance
of Chinese A-share market, a manager with the Swiss-based
investment bank UBS told the Securities Times newspaper
on Wednesday.
Yuan Shuqin, general manager in charge of
the Chinese securities department of the UBS, said about
60 percent of the company's investment in China is put into
China's A-share stock market, 20 to 30 percent into tradable
debts and 10 percent into Funds.
Less than 10 percent of the total fund
has been used to buy T-bonds, Yuan said.
China did not open its capital markets
to foreign institutional investors until 2003. A total of
27 QFIIs, including UBS, DeutscheBank, Normura Securities,
and Citigroup Global Markets Limited, have been allowed
to engage in the securities business on the A-share market,
China's domestic securities market, since the middle of
2003.
Some QFIIs, wishing to earn profit from
Renminbi's possible appreciation in the near future, reportedly
have made little real investment in the country.
The UBS has almost used all the newly-added
quota of 400 million US dollars, Yuan said. "Our clients'
demand for additional quota is huge, so UBS has asked the
State Administration of Foreign Exchange (SAFE) to give
another 300 to 500 million US dollars of investment quotas."
UBS was approved the first QFII by the China Securities
Regulatory Commission (CSRC) on May 26, 2003 and made its
first deal on China's domestic stock market through buying
four A-shares including Baoshan Iron & Steel, Shanghai
Port Container, SinotransAir and ZTE Corp..
When UBS firstly entered the Chinese stock
market in 2003, the indexes were dropping all the time,
and now the market performance has not turned better, Yuan
said.
"The market is still influenced greatly
by the policy," she admitted, noting UBS' clients adhere
to their own principle of choosing stocks on the basis of
listed companies' real value.
The confidence of individual investors in
A-share market has been severely frustrated by the four-year
downturn trend, and some new institutional investors lack
investment experiences, so the new policies promulgated
by securities watchdogs are never enough to invigorate the
stock market, she said.
The scale of QFII, a good potential incentive
to push forward the Chinese securities market's development,
should be expanded with more additional quotas granted,
she said.
UBS' maximum daily turnover accounted for
3 to 4 percent of the total turnover in the Shanghai Stock
Exchange, and in most time, its turnover equals to 0.5 percent
of the total turnover, said she.
After years of fierce debate, China last
month began an experiment to tackle one of the major problems
blamed for its sluggish stock markets -- the split share
structure, which refers to the existence of a large volume
of non-tradable state-owned and legal personal shares. The
reform plan, aiming to make all shares tradable, has caused
drastic fluctuations of composite indexes recently.
Yuan, hoping the QFII system will be more
transparent and stable, expressed wish that QFIIs would
be allowed to buy corporate bonds in the future.
By Xinhua writer Chen Gang
