Relax Chinese citizens to buy Hong Kong shares, QDII will definitely boom Hong Kong Stock Market

According to the report of Mr. S.K. Chan and M.C. Yim, the reporter of Hong Kong Economic daily on 12th March, 2002 in Beijing, central government has positively responded to the request of government of Hong Kong SAR to permit the mainland's money invested in Hong Kong securities via Qualified Domestic Institutional Investor ("QDII") and has carried out a research over six months very recently. The former governor of People's Bank of China, "there should not be any technical problem in managing QDII and China Securities Regulatory Commission will issue the detailed administrative policies in due course", said Dai Xiang Long in replying the reporters at the afternoon of 11th March, 2002 during the meetings of The National People's Congress and the Chinese People's Political Consultative Conference.
 


 
In early 2002, mainland citizens were embarrassed by their saving of around USD 190 billions due to low interest and less investment opportunities. In fact, the money deposited in bank is indirectly going to invest in foreign financial products. It would not cause any fear on reminbi if part of the money invested in Hong Kong securities. Mr. Zu Liu Hu Fred, the managing director of Goldman Sachi, estimated the amount permitted to go out will be around USD10 billion, approximately, 5.2% of the foreign reserve or the eight days' average at Hang Seng Index in early March of 2002. It is anticipated that it would cause an impact on the A shares market and instability of China financial market once QDII is implemented. As the change of the China's top leaders in March of 2003, it is anticipated that there is little chance to implement QDII in 2003.