Investment scheme brings transparency
Updated: 2007-08-28 07:14
According to a survey issued by the Hong Kong Exchange, the Cash Market Transaction Survey, transactions by mainland investors were so minor before the 1995-1996 fiscal year that the survey did not bother to list them as an independent item.
In 1996, transactions by mainland investors became an independent item in the Member Transaction Survey, the name then used for the Cash Market Transaction Survey. They represented a mere 0.6 percent of all the overseas agency trading. However, their proportion has climbed steadily since then, reaching 5.44 percent in the 2005-2006 fiscal year.
Mainland investors have the same emerging profile in the stock markets of other countries. It is no longer news that mainland investors are putting large sums in the New York Stock Exchange, NASDAQ and other markets. Their active participation has also contributed to the popularity of Chinese stocks on the US share market.
According to statistics from the US Treasury Department, mainland investors held $3 billion of US equities by June 30, 2004.
These capital flows are not under State scrutiny, nor are they included in the official statistics, survey or reports. The exclusion of this money from China's balance sheet of international payments may pose extra challenges for decision-makers in managing the economy.
Against a background of increasing pressure for renminbi appreciation and excessive liquidity in the domestic market, it is unrealistic for us to expect a substantial increase in overseas investment by individuals. However, it is hoped the scheme will make cross-border capital flows more transparent, making it easier for decision-makers to gauge sentiment in the country.
The author is a researcher at the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce
(China Daily 08/28/2007 page10)
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