The Federal Government announced last week that Australia was now an approved investment destination under the Chinese Qualified Domestic Institutional Investor (QDII) scheme as administered by the China Banking Regulatory Commission (CBRC).
ASIC and the CBRC have formalised an agreement, which will give effect to the Treasurer’s announcement.
ASIC and the CBRC have accepted Letters of Exchange which has allowed Australia to be recognised under this scheme.
ASIC Chairman, Mr Tony D’Aloisio said Australia’s recognition under the QDII was evidence its capital markets were seen by China as being as significant as Hong Kong, United States, United Kingdom Singapore and Japan who are also currently recognised under the QDII scheme as administered by the CBRC.
‘This agreement will lead to Australia being a more attractive destination for China’s capital investment. It has potential to improve liquidity on the ASX and increased investment in Australian managed funds’, Mr D’Aloisio said.
The QDII scheme seeks to develop the overseas wealth management business of Chinese commercial banks on behalf of their clients. Qualified Chinese commercial banks will now be able to offer their customers a range of investment opportunities available in Australia, including investments in Australian listed stocks and managed investment schemes registered by ASIC, potentially leading to an increase in the liquidity of the Australian capital market. Chinese funds under management stood at US$451 billion at the end of 2007 and by the end of 2008 could be as much as US$720 billion.
‘Chinese institutions regulated by the CBRC can apply for an allocation of their funding to be able to be invested in Australian stocks and managed funds. I am confident that the Australian investment community will embrace this important development and the opportunities it presents,’ Mr D’Aloisio said.
In addition to the agreement with the CBRC, one of the major Chinese regulatory bodies, the China Securities Regulatory Commission (CSRC), has confirmed its existing MOU with ASIC is sufficient to allow recognition of Australia as an investment destination under the QDII regulations it administers.