17bln USD set for qualified foreign investors

China's foreign exchange authority says that 17 billion US dollars worth of quota had been issued to 88 QFII, or qualified foreign institutional investors, by the end of the first quarter.

The State Administration of Foreign Exchange announced last week it has authorized a quota of 200 million US dollars for each of two QFIIs. This is the first time that SAFE has approved any of these quotas this year.

Analysts say the system is good for China's capital market.

Lu Junlong, Strategic analyst, Dongxing Securities, said, "The QFII is a transitional scheme. It is a special channel for overseas financial investors when a country's capital market is not entirely open "

Analysts say the inflow of foreign capital through the QFII scheme helps stabilize China's domestic equity market and brings more investment variety.

Lu said, "Foreign investors tend to invest in big chips and consumption stocks. It shows that they believe in China's overall economy and the growth expectations of domestic consumption. "

China launched the QFII program in 2003. It allows foreign investors to trade China's domestically listed RMB-denominated A shares. A foreign investor can receive up to one billion US dollars worth of quota.