Li Fu’an, Director General of the Supervisory Cooperation Department for Banking Innovation of the China Banking Regulatory Commission (CBRC) revealed that the overseas financial management services of commercial banks would soon be allowed to expand into the US market.
During the Strategic Economic Dialogues held between China and the US in June and December, 2007, the two governments discussed plans for Chinese capital investing in the US stock market. However, with the deepening of the US subprime crisis, the supervisory department has been worrying over the proper time to launch the plan.
Wang Qinghua, Commissioner of CBRC Discipline Inspection, said recently that although fluctuations and uncertainties exist in global financial markets, China’s domestic financial industry was ready to step gradually into the greater world.
Since May 2007 the CBRC has signed supervisory cooperation agreements with the Hong Kong Securities and Futures Commission, the UK Financial Services Authorities, the Monetary Authority of Singapore, and Japan’s Financial Service Agency, expanding commercial banks�overseas financial management services�QDII products of to these countries.
Wang Huaqing said the QDII business was maturing, and there would be large room for future development. The CBRC would continue to reinforce its cooperation with overseas supervisory authorities and expand overseas investment possibilities gradually from developed capital markets to emerging markets.
In regard to the further improvement of commercial banks�QDII business, Wang said they should gradually reduce their dependence on overseas investment products and increase their ability to independently develop and manage investment themselves. But, they must strictly abide by the regulations on the limits on stock investment percentage in their portfolios, prudently formulate investment strategies, reinforce portfolio management, and effectively manage risk through diversification.
By the end of last year, 23 domestic and foreign-invested banks had gained the license for QDII business, and 16 of them have launched 262 QDII products, with total sales revenue of 41.4 billion yuan ($1.2 billion)
Influenced by RMB appreciation and uncertainties in overseas markets, currently most of the products have been launched only in the Hong Kong market. Standard Chartered (China) yesterday launched the first two QDII products investing in Singapore. According to their plan, these two products will invest in PRU Global Basics Fund and PRU Asia Infrastructure Equity Fund, respectively.
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