Institutional Investors in China

The institutional investors are highly interested in the capital markets of China. The Chinese markets are always preferred by the institutional investors because they have huge growth potentiality. On the other hand, the institutional investors in China are stimulating the market growth.
The financial markets of China are the favorite investment areas of both the foreign as well as domestic institutional investors. There are different reasons for the huge presence of the institutional investors in China and one of these reasons is the GDP of the country. The GDP of China is growing at a rapid rate that represents the steady economic growth of the country.

The securities market in China is regulated by the China Securities Regulatory Commission. According to the Commission, the foreign institutional investors are less speculative in nature than the others.

At the same time, these investors also follow a definite style and policy regarding the investment. According to the investment strategies followed by the institutional investors in China, the investments in the blue chip companies are done for longer terms.
At the same time, these investors follow a stable investment strategy. As a result of these investment patterns, the stock markets of China are also becoming stable.

The Qualified Foreign Institutional Investor system or QFII was started in China in 2002. The system was designed and implemented by People’s Bank of China and China Securities Regulatory Commission. This system provided huge opportunity to the foreign institutional investors in the Chinese capital markets. The rules regarding the entry of foreign institutional investors in Chinese market have been modified in 2006 in order to bring more foreign investors in the China capital markets to add much width and depth to the market.

According to the new provisions, the Qualified Foreign Institutional Investors in China capital markets should have minimum securities assets worth $5 billion under their management. This limit was almost double in the previous years and so a number of foreign institutional investors were unable to enter the Chinese capital markets.

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Last Updated on : 5th July 2013