Hong Kong stock market to benefit from new mainland investor scheme
Central bank prepares for 'QDII2' trials to boost private buying of overseas stocks
The Hong Kong stock market is poised to receive a windfall from a renewed effort by Beijing to allow more mainland citizens to buy securities listed on overseas exchanges.
The People's Bank of China announced late on Friday that preparations are under way for trials of its so-called qualified domestic individual investor (QDII2) scheme. The scheme is part of a big initiative this year to increase outbound investment by the private sector. The mainland's central bank did not provide details.
It is a key step towards greater financial liberalisation that is likely to be ushered in by premier-in-waiting Li Keqiang, who has vowed to pursue major policy reforms to stimulate further economic growth.
China, which had US$3.31 trillion in foreign-exchange reserves at the end of December, has been moving steadily since 2009 to develop the yuan into an international currency.
Individual mainland investors now can purchase stocks and other securities in foreign capital markets only through authorised funds under the qualified domestic institutional investor (QDII) initiative established in 2006.
"I expect the Hong Kong stock market to directly benefit from the QDII2 initiative," Hu Yifan, the chief economist at Haitong International Securities, said yesterday. "It could have a positive impact on the Hang Seng Index."