Beijing, Dubai bank regulators sign deal

Move paves way for mainland lenders to invest QDII funds in the emirate's equities

The mainland banking regulator yesterday signed a memorandum of understanding with the Dubai Financial Services Authority on supervisory co-operation, paving the way for mainland lenders to invest in the emirate's equity market through the qualified domestic institutional investor scheme.

Under the agreement, the two regulators would exchange information and enhance market access, the China Banking Regulatory Commission said on its website.

'Through mutual assistance and information sharing, we can promptly identify risks and take timely regulatory measures to protect the interests of investors,' it said.

Under the QDII scheme, mainland commercial banks are allowed to design financial products for clients and invest the funds raised in markets that have signed such deals with the CBRC. Twenty-seven overseas regulators - including those of Hong Kong, the United States, Britain, Canada, Germany, South Korea, Singapore, France, Spain and Pakistan - have signed agreements with the CBRC.

The agreement with Dubai reflected mainland banks' interest in investing clients' money into emerging market countries, which could generate higher returns than in developed markets, analysts said.

'The central government is looking into Dubai and other United Arab Emirates countries flush with petrodollars, though they could also mean a riskier investment environment,' said Yi Xianrong, a research fellow at the Institute of Finance and Banking of the Chinese Academy of Social Sciences.