The Chinese mainland's latest release of the qualified domestic institutional investor (QDII) scheme continued to give impetus to Hong Kong for boosting its position as the international financial center.

In his latest column posted on the Financial Services and the Treasury website Sunday, Secretary for Financial Services and the Treasury Frederick Ma said the Chinese mainland's latest plan to deepen its foreign-exchange administration regime will enhance Hong Kong's position as an international financial and asset- management center.

The measures, announced by China on April 13, include allowing Chinese mainland institutions and residents to entrust mainland commercial banks to invest a certain amount of money in financial products overseas, and allowing insurance institutions to invest part of their assets in overseas fixed-income products and money- market products.

"Regardless of the amount involved at the start, the new measures will broaden the channels for overseas investments of the vast funds in the Chinese mainland," Ma said, adding he expects far-reaching and positive effects on Hong Kong's financial markets.

Ma said Hong Kong can benefit in two ways. First, some of the mainland funds may be invested in the financial products of Hong Kong markets, thereby increasing the trading volume and liquidity.

Second, mainland investors can engage Hong Kong financial institutions which possess rich international experience and professional knowledge to make global investments.

"This will enhance the investment returns and diversify the risks of investors from the Chinese mainland," Ma said, "the development of our financial services sector will also be strengthened."

The secretary expected that during the initial stage of implementation, mainland financial institutions will focus more on products with fixed returns, such as bonds.

With streamlined procedures for individual mainland residents to buy foreign exchange and an increase in the limit, a person can exchange RMB for up to 20,000 U.S. dollars each year and deposit it into his/her domestic foreign-exchange account or use it for recurrent foreign exchange expenditure.

Source: Xinhua