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New QDII measure takes effect

(Shangguan Zhoudong)
Updated: 2007-07-05 18:18

A trial management measure on qualified domestic institutional investors' (QDII) overseas investment in securities took effect today, China Securities News reported.

Regulators will start receiving and approving new QDII investment schemes from domestic fund management companies and securities companies as of today.

Currently, QDII investment products are difficult to sell because they are less attractive than funds, which performed better in the first half of this year.

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Statistics show that from January to June this year, the average net worth of equity funds and index funds increased by more than 60 percent, far higher than the returns on some investment products under the QDII scheme.

More investors still believe the bullish stock market will continue and they are not very willing to invest in overseas markets, with exchange rate risks that must be taken into account.

Insiders said that although some fund companies want to dive into the QDII business, there may not be a massive launch of QDII products in the near future due to risks of overseas markets being uncontrollable and most fund companies having no experience in overseas markets.

Currently, QDIIs are allowed to invest in stocks, options, mutual funds and derivatives in markets whose regulators have signed memorandums of understanding with the China Securities Regulatory Commission.

It's helpful to dilute risks by investing money in these markets and products with little association with the A-share market, insiders said.