China steps up opening of markets with tenfold boost to foreign investors

Hong Kong and mainland stocks jumped yesterday as the nation's securities regulator said the quota for foreign investments in the mainland's financial markets could rise by up to 10 times.

The announcement by China Securities Regulatory Commission chairman Guo Shuqing, coming on the heels of the central bank's statement that work was on to encourage outbound investment, was seen as further proof that Beijing was intensifying efforts to open up the capital markets.

The Shanghai stock index rose more than 3 per cent, the biggest one-day gain in nearly a month, while the Hang Seng Index gained 0.64 per cent on the news.

The Hang Seng China Enterprises Index, which tracks stocks of companies incorporated on the mainland but listed in Hong Kong, rose 1.36 per cent.

Speaking at the Asia Financial Forum in Hong Kong yesterday, Guo said the quota for the original dollar-denominated Qualified Foreign Institutional Investment (QFII) scheme and the renminbi-denominated QFII, or RQFII - the two schemes that allow overseas institutional investors to buy stocks and bonds on the mainland - could go up by nine to 10 times.

The two schemes account for up to 1.6 per cent of the funds invested in the mainland's yuandenominated A shares.

Guo's statement followed the People's Bank of China's announcement on Friday that preparations were under way for trials of the qualified domestic individual investor, or QDII2, scheme.