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Foreign investors eye China's futures market

(Xinhua)
Updated: 2007-02-26 09:58

A draft revision of regulations on futures trading recently approved by the country's State Council suggests that foreign investors may be allowed to acquire Chinese futures companies.

Originally, Hong Kong investment was allowed to have no more than 49 percent of a mainland futures company under CEPA (Closer Economic Partnership Arrangement) between the Chinese mainland and Hong Kong and Macao to encourage free trade.

Foreign investors could only make a detour to merge and acquire mainland futures companies via its Hong Kong branch, as in the trial case of Galaxy Futures jointly established by the Hong Kong branch of ABN AMRO Bank and China Galaxy Securities Co.

Hong Kong investment still holds priority over foreign investment concerning the M&A of mainland futures companies, but appears unattractive to those companies.

Hong Kong investment is not the best choice for mainland futures companies due to its lack of advanced management, which is exactly what the latter need from their new shareholders to upgrade their brands, says Liu Songtao, general manager of the Beijing branch of Shanghai Continent Futures Co Ltd.

The newspaper also said that a report from the research center of China Securities Regulatory Commission had advised the government to introduce QFII into the futures sector.

However, foreign investors' entry into China's futures market by buying into Chinese futures companies remains uncertain till further policies comes up, the report said.

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