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QFII is the abbreviation of English qualified foreign institutional investors, that is, "qualified foreign institutional investors". QFII system refers to an open market model that allows qualified foreign institutional investors to remit a certain amount of foreign exchange funds under certain regulations and restrictions, and convert them into local currency, and invest in the local securities market through a special account under strict supervision, and their capital gains and dividends can be converted into foreign exchange remittance after being audited.
this is a transitional system that introduces foreign capital and opens the capital market to a limited extent. In some countries and regions, especially countries and regions with emerging market economies, because the currency is not fully convertible and the capital account is not yet open, the involvement of foreign capital may have a greater negative impact on their securities markets. Through QFII system, the management can restrict and guide the entry of foreign capital, make it adapt to the development of domestic economy and securities market, control the influence of foreign capital on domestic economic independence, curb the impact of speculative hot money from abroad on domestic economy, promote the internationalization of capital market and promote the healthy development of capital market. This system requires foreign investors to meet certain conditions when entering a country's securities market and get approval from the relevant departments of the country.
QFII restrictions mainly include qualifications, investment registration, investment quota, investment direction, investment scope, restrictions on the inward and outward remittance of funds, and so on. South Korea and other countries and regions began to establish and implement this system in the early 199s.
Naturally, the significance of introducing QFII mechanism is to attract qualified foreign institutional investors to invest in China capital market, and the more direct purpose is to bring a large number of new overseas funds to China capital market. This will undoubtedly inject fresh blood into the capital market and bring vitality to the market.
QFII system originated in Taiwan Province, China in 199. The purpose of implementing this form at that time was to solve the problem of opening the local securities market to foreign capital under the condition of capital account control. This system has obviously achieved good results in Taiwan Province, and has since become an important system adopted by many emerging market countries. According to Taiwan Province's experience, QFII has strict restrictions on the proportion of foreign investment, and also has certain restrictions on the allocation of foreign assets. The opening process of Taiwan Province's securities market can be divided into three stages: first, from 1983 to 199, Taiwan Province mainly adopted the indirect investment mode of opening domestic investment trust companies and raising overseas funds to invest in Taiwan Province's stock market; Second, from 199 to 1996, foreign professional investment institutions (QFII) were allowed to directly invest in Taiwan Province's securities market after examination, and the entry of funds into the market was controlled by means of qualification control, and direct investment was gradually opened. At that time, Taiwan Province's restrictions and review requirements for foreign institutional investors mainly included qualifications, investment amount, shareholding ratio, and time limit for remittance and remittance of funds. The third stage is from March 1996 to now, Taiwan Province has fully opened up direct investment from "overseas Chinese and foreigners at home and abroad", and at the same time fully liberalized the investment trust industry. The orderly opening of Taiwan Province's capital market made foreign capital not have a big impact on the market, but laid the foundation for its gradual stability and maturity.
QFII is almost unanimously approved by the domestic market. QFII has many positive effects on the securities market. First of all, it can increase the supply of funds in the securities market; Secondly, it is conducive to improving the investor structure. At present, investors in China are mainly retail investors, and the market performance is mainly short-term speculation. The implementation of QFII system meets the needs of institutional investors in China.
On November 5, 22, China's Interim Measures for the Administration of Domestic Securities Investment by Qualified Foreign Institutional Investors was officially promulgated. Since May this year, nine overseas institutional investors, including Swiss Bank, Nomura Securities, Morgan Stanley, Citigroup Global, Goldman Sachs, Deutsche Bank, HSBC, ING Bank and Bank of JPMorgan Chase, have been granted QFII status. The investment quotas of the first eight institutions are 3 million US dollars, 5 million US dollars, 3 million US dollars, 75 million US dollars, 5 million US dollars, 1 million US dollars and 5 million US dollars respectively. Since Swiss bank took the lead in testing A-shares on July 9, QFII, like domestic investment funds, has focused on "value investment" and attracted much attention from the market.