Source AP ©

Report says China to boost quotas for foreign investment in shares

China plans to raise the quota for foreign share investments under its Qualified Foreign Institutional Investor program to US$30 billion (euro22.2 billion) from US$10 billion (euro7.4 billion), a state-run newspaper said Wednesday.

The China Business News cited an unnamed source saying the report said the move would emerge during high-level trade talks this week between China and the U.S.

The QFII program, launched in mid-2003, allows approved foreign institutional investors to trade yuan-denominated securities listed on exchanges in Shanghai and Shenzhen. Such shares are off-limits to most foreign investors.

The report also said China would also appropriately and gradually lift foreign ownership limits on equity in Chinese financial institutions. Current limits include a 25 percent limit on foreign ownership in domestic banks and a 33 percent limit on foreign securities firms investing in local joint-ventures.

Chinese regulators said earlier that they plan to increase the total QFII quota from the current limit, which has nearly been reached. Foreign institutional investors have been lobbying to increase holdings of Chinese shares.

China's stock watchdog also banned investors who are under investigation for insider trading or other violations from share trading for up to a month, intensifying a crackdown on market abuses.

The rules, issued late Tuesday by the China Securities Regulatory Commission, took immediate effect.

A person or institutions under investigation for trading violations will be restricted from trading for 15 days, the CSRC said in a statement.

The ban can be extended by 15 days if a case is "complicated," it said.

Regulators have vowed to crack down on fraud and trading abuses as prices have soared to record highs, drawing millions of new investors into the market.