The Study Of The Impact Of QFⅡ System On The Market

QFII is short for Qualified Foreign Institutional Investors. QFII system is a regime that to limit foreign investment and gradually open up our capital markets. Its main purpose is to attract foreign investment and funds and adapt the national or regional economic development to the world’s economic development. The QFII system originated in1990, first practiced in Taiwan. Then Singapore, South Korea, Brazil, India and other emerging countries and regions followed. On November7th,2002, the People’s Bank of China issued the Interim Measures for the Administration of Securities Investment in China by Qualified Foreign Institutional Investors, and act on December1st the same year. QFII system is not a common way for every country, but for some emerging countries or regions. In some countries or regions, their capital markets are not fully opened, the currency are not freely convertible, and the stock market are still in the early stages development, so large-scale foreign investment may have a great impact on its capital markets even lead to paralysis of the economy as a whole. The QFII system requires the foreign institutional investors get an approval to enter the national or regional securities market. The QFII system’s constraints include:eligibility conditions, the amount of investment, the scope of investment and the capital’s Import and Export. Therefore, QFII system can be flexibly implemented according to the degree of openness of the national or regional, to reduce the impact on the economy.This paper summarizes the Taiwan’s QFII experience, because of its features similar with China’s mainland capital market, so we pay attention to the problems in the implementation of the QFII system and predict the time when China’s mainland capital market opening up. As we can see from the Taiwan QFⅡ’s experience, in a short time, QFII system’s impact on the implementation of the country’s capital market is very limited, but in a long time, it can make great changes to the implementation of the country’s capital market. In addition, according to Taiwan’s QFII experience and the analysis of the openness of the mainland capital markets. we put forward mainland capital markets opening up of the four periods. We take this point because:the first, from Taiwan’s capital market and other capital market’s experience, we can see that the implementation of the QFII system generally take10-15years, therefore, we come up the point that the QFII system of mainland China will take13years; the second. from the changes of the mainland capital market since the implementation of the QFII system, we can see the extent of its opening up to the world. According to American scholar Papaioannou and Duke (1993) on the implementation of the QFII system, the opening of China’s capital market will go through four stages. Through these analysis, the article summarizes the positive impact of the implementation of the QFII system brought to the mainland capital market, including:change the concept of the investors, improve investor structure, promote the internal governance of listed companies, and accelerated financial innovation The pace of improving the service level of the domestic financial institutions, and provide a template for our pension market trading.Finally, with the constant improvement of the QFII system, the degree of opening up of China’s mainland capital market is getting higher and higher, and the risk which China’s capital market is facing is also constantly changing. Here, risk analysis is another innovation. In this paper, we proceed from the QFII speculative risk and liquidity risk, and take some suggestions:the first, establish a new system to improve the QFII system; the second, improve the level of the financial regulatory authorities; the third, establish standardized information disclosure system; the four, promote the A shares into the global index; the last, promote of mechanisms innovation and talent introduction actively.