From: “Shanghai Securities News” by Shang Wen
Compiler: Fund China

After a year and a half later, “eagerly awaited” The fund industry has to wait until the QDII business again granted. Recently, China Southern Fund and ChinaAMC two fund companies conduct QDII business applications also received regulatory approval, This sends up the fund industry conduct business or QDII will have speed.

However, the “speed” does not mean “leap.” In accordance with the relevant departments of the ideas will actively and steadily expanded on the premise QDII fund companies conduct business scope of the pilot project. Meanwhile, the domestic fund companies, the global market is the investment experience of a blank, investment capacity needs through long-term practice of gradually learn to grasp and mature. Therefore, we can anticipate that the fund will not QDII business in the short term to achieve leapfrog development.

Meanwhile, we should also clearly understand that, in terms of domestic residents to invest overseas and the growth in demand for a stronger sense of investment, or from the fund industry to encourage our “going out” through participation in a truly global competition nurture their competitiveness point of view, QDII fund companies conduct business trend of the times, its very broad prospects for development.

It is undeniable that since last year, the A-share market skyrocketing allow domestic residents to invest in overseas demand for temporary suppression. However, with A-shares rising, the investment risks are also gradually surfacing. Future requires overseas investment risk diversification, the market demand will also rise accordingly.

On one side are residents of the domestic demand for overseas investments up while she is one of the global investment fund management company the ability to “immature” and even “missing.” In the past, investment management, the Fund’s investment tentacles stay in the domestic market. Although there are some larger fund companies in the fund management process with the use of foreign capital. “Cooperation” mode, the absorption of advanced foreign experience, but direct investment overseas markets experience almost zero. Such a situation is bound to not be able to meet the rising domestic demand for investment overseas residents.

Fund QDII expand its scope of operations, to accelerate the development of the global investment fund companies, the significance of capacity far more than that.

As international trade with between the increasingly fierce competition, domestic firms should as soon as possible, to participate in this competition, strive in the international arena to gain a foothold. Meanwhile, the Foundation of China’s asset management industry a very important institution, its global investment portfolio management capacity, and the notion of service and higher quality services to the whole of our domestic financial services market is of great significance.

It is based on the above considerations, regulators recently officially issued the “qualified domestic institutional investors in overseas securities investment management pilot scheme,” the QDII fund companies conduct business made a principled, This will help the Fund QDII business speed.

It is noteworthy that the Fund QDII business gate opening, due to its nature of Public Fund, faced with the banks had QDII products “close combat situation.” However, compared to the banks, the Fund QDII business has incomparable advantages.

Expected yield is higher than similar banking products; Strong flows; Compared to “self-production and sales,” the bank QDII products, Fund sales trusteeship system to ensure that funds with less risk; strict information disclosure system, and establishing transparency in the operating environment; fund companies have specialized investment research team. But these advantages make QDII business in the competition, fund companies will to the upper hand.

Special needs to be pointed out is that in spite of allowing fund companies conduct QDII business, foreign investment can be employed as an investment management consultant to provide services, but only one permitted, while not mandatory, fund companies must bear the primary responsibility for the investment management. This shows that the management is intended to cultivate our fund raising global investment management capabilities of diligence and hard work.

The above analysis, it is foreseeable that the QDII fund companies will be big business for them. While QDII will also become internally fund company’s primary business area.

Copyright Fund China 2008.

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