QDII will be included in 'gift basket' says JP Morgan
Updated at 7.07pm:
The qualified domestic institutional investor (QDII) scheme would not be included in the ''gift basket'' offered by the mainland to boost Hong Kong's economy due to natural uncertainties and technical problems, JP Morgan said on Monday.
The investment bank said the mainland was not keen to roll out QDII in the near term due to uncertainties brought by the Sars outbreak as well as concerns about possible floods during the coming summer.
Also, the mainland authorities had yet to prepare the related regulations for QDII despite having worked out the details of the scheme, the investment bank said.
''Technically, it will be able to roll out QDII before the year end or even in the late third quarter of 2003. But exactly when it will do so will depend on the economic situation in China.'' JP Morgan economist Joan Zheng said in a research note.
Despite the lack of QDII in the gift basket, the mainland authorities would announce a series of measures ahead of the sixth anniversary of the handover to help improve public sentiment in the territory, Ms Zheng said.
The measures included allowing more Guangdong residents to visit Hong Kong, signing the ''Closer Economic and Trade Integration Arrangement'' and co-ordinating infrastructure projects between Hong Kong and the regional governments across the border, JP Morgan said.
Meanwhile, sources said the implementation of 'zero tariff' for Hong Kong would result in profits of some $10 billion for the local business sector as several thousand types of the territory's products could benefit from the arrangements, local newspaper Sing Tao Daily reported on Monday.
'At the import-weighted average Chinese tariff rate of nine per cent, the zero tariff policy would save Hong Kong about $4 billion in annual tariff payment, or a bit more than 0.3 per cent of the GDP,' Jun Ma, economist at the Deutsche Bank said in a research note last week.
