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Beijing recognises KL as investment destination

CHINA has recognised Malaysia as an approved investment destination under its Qualified Domestic Institutional Investor (QDII) scheme administered by the China Banking Regulatory Commission (CBRC).

The Securities Commission (SC) said in a statement yesterday that the recognition is a major step forward for the Malaysian capital market as it will facilitate the flow of Chinese funds into the country and open up business opportunities for the Malaysian capital market intermediaries.

SC chairman Tan Sri Zarinah Anwar and CBRC chairman Liu Ming Kang signed the letters of exchange in Beijing, China, yesterday to formalise the recognition.

Also present were Bursa Malaysia chairman Tun Mohamed Dzaiddin Abdullah, Malaysian ambassador to China Datuk Iskandar Sarudin and Finance Ministry’s deputy secretary general (policy) Datuk Latifah Datuk Abu Mansor.

At the same time, the China Securities Regulatory Commission (CSRC) confirmed Malaysia as an approved investment destination based on its memorandum of understanding signed with the SC in 1997. QDII is a scheme which enables Chinese nationals to invest in overseas markets through approved institutions.

Approved institutions regulated by CBRC and CSRC may now invest funds pooled from their clients into Malaysian securities, including equities, fixed-income products and collective investment schemes approved by the SC. They may also engage the services of licensed Malaysian fund managers to assist with QDII investment matters.

SC said the potential inflows of Chinese funds will contribute to increased liquidity in the Malaysian market.

With the designation, the country now joins the ranks of 10 other QDII recognised jurisdictions under the CBRC. They are Australia, Canada, Hong Kong, Germany, Japan, Luxembourg, Singapore, South Korea, the UK and the US.

In a separate statement, Bursa Malaysia Bhd chief executive officer Datuk Yusli Mohamed Yusoff said the QDII recognition was a significant development for the Malaysian market in paving the way for China funds seeking investment opportunities in this part of the region. “This augurs well for Bursa Malaysia and is aligned with our other initiatives such as improving our country classification for the capital market,” Yusli said.
 
 
US funds can now trade palm oil in KL
 
The United States Commodity Futures Trading Commission (US CFTC) has allowed member brokers of Bursa Malaysia Derivatives Bhd to solicit and accept orders and customer funds directly from US customers without the need to register separately as a futures broker in the US.
 
Bursa Malaysia said in a statement that this approval was issued in relation to Regulation 30.10 of the US Commodity Exchange Act. “The approval was premised on the fact that member brokers of Bursa Malaysia Derivatives Bhd are subject to comparable customer protection standards in Malaysia,” it said.
 

Bursa Malaysia Derivatives chief executive officer Chong Kim Seng said it was a new added opportunity for its brokers to capitalise on this opportunity to increase their trading base.
 
“With the approval from US CFTC, and through the active solicitation of our brokers, we believe that Bursa Malaysia Derivatives’ futures products will gain wider market access and thereby, encourage more cross border trading. It will eventually create more vibrancy in the market and strengthen the profile of our derivatives offerings,” he added.
 
Member brokers are required to file certain representations with the US National Futures Association to avail themselves of the Regulation 30.10 relief.

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  1. June 28, 2010 at 5:37 pm

    Got an investor note from Citigroupe today. The analyst say with Malaysia granted China QDII status, pooled funds from China can now invest in Malaysian equities, fixed income instruments, structured products and mutual funds /collective investment schemes. So far, China has allocated a quota for investments up to US$47.7 billion under the overall QDII scheme, with roughly 41% or US$27.8 billion still left un-invested. This is large, compared to total gross portfolio inflows into Malaysia from China of a mere US$14 million, or just 0.01% of Malaysia’s gross portfolio.Since China funds can now engage services of Malaysia’s fund managers and brokerages to assist with investments, there will be some marginal benefit for the domestic financial services sector. Commodity plays, especially palm oil futures, will benefit from China investments.

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