Investors, scholars approve RQFII

The mainland is considering opening its securities and futures markets to Taiwan investors, through an expansion of its Qualified Foreign Institutional Investor, or QFII, program. The new program being discussed between the Chinese Mainland and Taiwan would be called the Renminbi QFII, and could provide a boost mainland markets once Taiwan investors became more involved in them. Wang Lihuan has the story.

Jonathan Chen has been doing business in the mainland for over 19 years. Before running a tea franchise, he worked in finance for several years, and was always interested in investing in mainland stock markets. He says he'd be delighted with an RQFII program that would allow Taiwan investors to tap into the A share market, and says he thinks that mainland blue chips would be popular with Taiwan investors.

Jonathan Chen, chairman of Tea Scene, said, "Because first of all, blue chips mean that they are (doing so well) in their business, as I said, most of blue chips in China they do have a state owned shareholders background, considering about risky and think about policy concerning, it's more controllable."

According to officials of the China Securities Regulatory Commission, Taiwan RQFIIs could be granted an investment quota of 100 billion yuan, or 16 billion US dollars. Also under consideration is allowing financial institutions from Taiwan to be able to hold as much as 51 percent, up from 49 percent, of joint-venture brokerages shares in Shanghai, Fujian and Shenzhen. It is expected the new rules will have a healthy impact on mainland markets once they are introduced.

Prof. Xia Lijun, chair of Department of Accounting, Shanghai Jiao Tong Univ., said, "When the market is opened up and Taiwan QFIIs invest in the A-share market, it will raise the amount of capital in the market. Also, the news itself may help rebuild the confidence level of investors. Besides, increasing the proportion of institutional investors in the A-share market would be good for the market in the long run. "

To boost the market, the availability of transparent information is one of the challenges and is regarded as a major difference between making investments in the Mainland and Taiwan. Despite that, individual investors are also looking forward to the market opening for them.

Jonathan Chen said, "So let's say let's put the market open, for people easy to come in and go, so let's say for RMB [to] circulate freely in the market and I think this is what we expect to see in the future."

So far plans are for the RQFII program to only operate in Hong Kong. Individual investors in Taiwan now can directly invest in the mainland's dollar-denominated B-share market, and they can buy yuan-denominated A shares through the QFII program. Allowing Taiwan institutions to enter the market in Renminbi will be a major shift that it is hoped will benefit both the market and the investors.