BEIJING, March 15 (Xinhua) -- Foreign capital inflow into the Chinese stock market will continue to accelerate thanks to global index provider MSCI's decision to increase the inclusion factor of China’s A-share from 5 percent to 20 percent, according to analysts.
As an result, it will spur foreign investment in the A-share market as the MSCI indexes are a benchmark and often underlying basis of numerous financial products worldwide.
MSCI is welcome to continue to include A-Shares in its different index systems. At present, the inclusion factor is still low. It is believe that as the market develops, the inclusion factor will continue to improve, said Liu Xinhua, former vice-chairman of the China Securities Regulatory Commission (CSRC) recently.
Apart from the MSCI, China is enhancing the foreign capital flows into its stock market by innovative programs.
To be specific, the quota of the China's dollar-denominated Qualified Foreign Institutional Investor (QFII) program and the RMB Qualified Foreign Institutional Investor (RQFII) program have been expanding to increase the capital flows into Chinese capital market, added Liu.
The QFII and RQFII programs, introduced in 2003 and 2011, respectively, allow overseas institutional investors to move money into China's capital account for investment.
Furthermore, Liu suggested that Chinese stock exchange shall broaden its investment scope into foreign countries. For example, the Shanghai Stock Exchange could invest in the Pakistan Stock Exchange (PSX) so that the funds of the PSX can enter China’s stock market through corresponding channel, in accordance with the law.
However, it is worth noting that there have been concerns about risks on capital flows into the Chinese capital market, including regulatory risks, technical risks, and some uncertainty risks, added Liu.
China's financial authorities will make efforts to revise the securities law and formulate the delisting system so as to reduce or defuse potential risks in the capital market, as well as optimize financial conditions for attracting foreign investment, said Liu. (Edited by Jiang Feifan)
A single purchase
