Jan. 26, 2007 (China Knowledge) - Qualified foreign institutional investors (QFIIs) remain the second-largest institutional investor behind fund houses in the Mainland stock market, according to findings from the China Securities and Futures Supervision Conference.

By the end of 2006, QFIIs accounted for 3.88%, or RMB 97.1 billion, of the total market cap of Mainland tradable A-shares in Shanghai and Shenzhen Stock Exchange. This is an increase of 1.8 times compared to the same period in 2005, when QFIIs only held RMB 34.7 billion.

By the end of 2006, 52 foreign institutions were granted QFII status with a total investment quota of US$9.55 billion, of which US$2.3 billion were granted after last August. This is due to the government speeding up the processes for approvals in the second half of 2006. If the QFII investment quota is converted to RMB, it comes up to about RMB 76 billion, which is much lower than the market cap of RMB 97 billion the QFIIs currently hold.

China’s launch of a new securities regulation last year led to a huge change in the Mainland capital market  - the entry of institutional investors led to the market cap in 2006 doubling to over RMB 8 trillion while the market turnover neared 8 trillion as well.

By the end of 2006, institutional investors like investment funds, QFIIs, brokerage houses, pension funds and insurance companies owned 41% of the total market cap in Mainland stocks, an increase of 10 percentage points over that in 2005.