Taiwan Experience Of QFII And Its Effect To Our Mainland Securities Market

QFII(Qualified Foreign Institutional Investors) system was originated from China Taiwan, then was imitated by some countries of new developing market such as India and Korea. On Sep.1st, 2002, the QFII was official enacted by China Securities Market.QFII system is a mechanism that intends to make a limited restriction during the process of our securities market's opening. QFII system regulates application procedure and condition, capital trusteeship and liquidation, financial tools permitted to invest, capital remit and management of QFII. Under QFII system, any foreign investors must make access to QFII for the securities trading qualification in order to invest to our domestic securities market, for the purpose that our government is easy to carry out foreign currency supervision and macro adjustments and controls. Comparing all the QFII experiences in the countries of new developing market, China Taiwan was the most successful. In Taiwan Securities market, QFII completed the well process from theory to practice then to theoretic innovation. The manner of loosing regulation gradually reduced the risk efficiently and insured the success of QFII.QFII improved the competitiveness of Taiwan securities market, reformed the investor structure, reduced speculation and sped the formation of rational investment. It is known that there are many common grounds in the initial stage of QFII both in Taiwan and mainland's securities market, for example, the irrationality of investor structure, lacking for the idea of rational investment, low degree of market's internationalization. So we can say that the QFII experience in Taiwan will make sense to its mainland and can be used for reference. Of course, there are so many differentia between the two markets, for instance, the stock segmentation in mainland securities market. Therefore, we should constitute our own strategy on the basis of our own conditions.This article summarizes and concludes the procedure, functional and statistical characters of China Taiwan, then analyzes the feasibility of QFII in China under the similar circumstances. Based on the above, this article forecasts the coming forward effects QFII will bring to China securities market. In short term, QFII will not change China stock market dramatically. How ever in long terms, it will benefit the market in many aspects, including that QFII will make a change of investors' structure; QFII will import the mature and advanced investment methods and reasonability; QFII will lead the standardization of listed companies and promote their management level; QFII will favor the market supervision; QFII will lead the new development of domestic financial services; Domestic market will be tied and affected with the international market more tightly, etc.In addition, during the course of our market growing, there must be some faultiness. This article analyzes the short-term behavior and market influence of QFII in the nearly two years, and put forward that some bugs in the securities market has limited the enthusiasm and influence power of QFII to some degrees. At present, QFII insist on low risk strategy and pay most attention to steady firms, but there is no evidence that shows its long-term possessing idea. Its force is so limited. However, along with the attraction of economic grow in China mainland, QFII will produce deeper impress to our market's standardization and internationalization. Finally, I still make some research on the risk and risk management of QFII. The frame of this article is as the follow:Chapter One: Taiwan experience of QFII and its illumination to mainland securities market.Chapter Two: Investment strategy and market influence of QFII in short-term.Chapter Three: The risk of QFII in mainland and measures of risk management.Due to the limitation of time and my own reasons, there are some insufficiencies in my article. All of these need my further study and promotion.