CHINESE securities expert Professor Li Yining says foreign investment funds should be allowed to buy A shares, now sold only to mainland investors, on the nation's two stock markets, according to a report in the official China Securities newspaper.
Professor Li, head of the drafting team for China's first securities law, said such a move would give stock markets a welcome boost, but that detailed regulations were needed to protect small investors.
''This is a good thing, but the side effects are very clear,'' Professor Li was quoted as telling a meeting in Shenzhen.
He said that investors could be hurt if large foreign investment funds tried to drive up the market and then take profits.
To prevent this, regulations should be drafted stipulating strict conditions for disclosure of stakes held and setting long time-frames for sales of a large volume of stocks.
Foreign investors are now allowed to buy only B shares, issued by a limited number of companies.
