Securities firms set sail for overseas investment
(Xinhua)
Updated: 2008-01-10 14:43
Updated: 2008-01-10 14:43
Three Chinese securities firms have acquired the status of qualified domestic institutional investors (QDII) this week, becoming the fresh force that analysts say might rekindle local residents' enthusiasm for investing abroad.
The license from the China Securities Regulatory Commission for Everbright, Orient and Huatai has given rise to a new contingent of seven securities firms which are yet to design and release their products targeting overseas capital markets.
CIC Securities, which took the lead when receiving a quota of $5 billion last December, is expected to release its first overseas investment product in the spring.
Previous overseas exploration by the country's first contingent of QDIIs, mostly funds and banks, were not successful due to the outburst of the subprime mortgage crisis in the United States and the constant depreciation of the US dollar against the yuan.
The first four funds with the QDII licence, namely Southern Assets Management, Huaxia, Harvest and the China International Fund Management all embarked on a roller-coaster trip last September, with their net value lingering below or around 0.9 yuan at the moment.
As local stock markets begin to rally after a brief downward adjustment, the year's first QDII fund released by ICBC Credit Suisse, worth 22 billion yuan ($3.03 billion), met only a nonchalant response from institutions and individuals.
On Wednesday, the benchmark Shanghai Composite Index edged up 49.28 points, or 0.91 percent, to close at 5,435.81.
Industry analysts attributed the QDII's fading appeal to "bad timing" as stock markets in most regions of the world have been slapped by the US subprime crisis. Fears over exchange rate risks are also a major hindrance, they say.
Given the yuan has gained 27 percent against the euro compared to its loss of nearly seven percent against the US dollar last year, fund manager Cao Guanye, with the ICBC Credit Suisse, dangled the European market as a juicy bait in a pitch sale, saying that investors could enjoy both the profits of European enterprises and the extra gains from a rising euro.
"Unlike funds, securities companies are more experienced with overseas investment as many of them have subsidiaries in Hong Kong," analyst Xie Yan with Haitong Securities said.
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