China Will Speed Up Approvals for Qualified Foreign Investors

China will work to speed up approvals of qualified foreign institutional investors looking to buy into its domestic securities, as part of reforms aimed at adding depth to the country’s capital markets.

China’s foreign exchange regulator has approved $26 billion in QFII quotas for 138 qualified investors as of May 16, according to a statement posted on the State Administration of Foreign Exchange yesterday.

“SAFE has been working closely with China Securities Regulatory Commission to facilitate the capital market reforms,” said Sun Lujun, head of the capital-account management department at SAFE, according to the statement.“We’ll look to speed up the QFII approval process and enlarge the size of investment.”

Introducing more long-term overseas funds in domestic securities may help add breadth and depth to the country’s capital markets as it seeks to overhaul its economy. Authorities more than doubled quotas for QFIIs last month to $80 billion from $30 billion.

The Shanghai Composite Index has dropped 4.7 percent from this year’s high, set on March 2, amid concerns over the country’s slowing economic growth. It has lost nearly two-thirds of its value since its peak in October, 2007.

The China Securities Regulatory Commission posted a People’s Daily article on its website May 18 saying that barriers for overseas funds will be lowered.

Introducing more long-term funds from abroad “will help improve domestic investors’ confidence” and further open up capital markets, the regulator said in the article from the official Communist Party newspaper. The foreign institutions“will help form a rational investment culture” for Chinese markets as they mainly invest in blue-chips and seek long-term returns, it said.