Interest from global giants in the QFII scheme reflects their confidence in China's securities markets
Morgan Stanley and Citigroup Global Markets have won approval from the China Securities Regulatory Commission to buy publicly traded A shares as a ground-breaking scheme widens foreign access to the mainland's US$516 billion stock market.
The United States duo are poised to join Swiss bank UBS and Japanese brokerage Nomura Securities as the first qualified foreign institutional investors (QFIIs) to invest in the shares, hitherto reserved for mainland investors.
Last Friday, UBS and Nomura won foreign-exchange quotas of US$300 million and $50 million for investment in the scheme.
Under rules announced in November, QFIIs will be allowed to buy certain Chinese bonds in addition to the A shares, which account for the bulk of China's free-floating market capitalisation of US$167 billion.
'As a pioneer in investment banking in China, we are delighted to be among the first group of banks to be awarded a QFII licence,' Morgan Stanley's Asia-Pacific chairman Alasdair Morrison said yesterday.
'This initiative is a positive step for China as it integrates with the global capital markets in a measured way, providing an additional opportunity for foreign investors to take part in China's growth.'