News
FOCUS - summer 2007
Introduction - By Anthony Howland
Welcome to the latest edition of Focus, the newsletter from Performa keeping you in touch with the world of GIPS and all the latest news from Performa.
A year ago, if you had asked someone in China what they thought of GIPS, you would have been more likely to get a response regarding Global IP Solutions or the Graduate Institute of Pharmaceutical Sciences rather than the Global Investment Performance Standards. However, this could soon be set to change.
Last year, a scheme was introduced into China which now allows domestic institutional investors, authorised by the government, to invest in the overseas capital markets under the foreign exchange control system in China. The scheme (the Qualified Domestic Institutional Investors or QDII) was initially proposed by the Hong Kong government but now has support from both the China Securities Regulatory Commission and the State Administration of Foreign Exchange. Even though this scheme is relatively new, enormous progress has been made over the last few months.
In January of this year, the State Administration of Foreign Exchange announced an increase in the permitted amount of foreign currency fund conversion by a Chinese individual from $20k to $50k per annum. Such funds may be used to purchase QDII products offered by commercial banks or by fund management companies in China. This increase can only serve to make QDII investment more popular.
There was further progress in May, when the Chinese banks were given the go-ahead to invest as much as 50% of their overseas investment quotas in equity funds endorsed by overseas regulators such as the Hong Kong Securities and Futures Commission. This latest liberalisation should make QDII products even more attractive. This is generally seen as a move to encourage capital outflows of foreign currency from the overheating Chinese economy through such funds.
With such impressive progress in the area of international money management and given the penchant of the Chinese for regulations, it would seem a natural step for this rapidly emerging country to adopt GIPS (I also imagine they will be in favour of mandatory verification!).
Only time will tell.
Finally, I would like to thank Remco van Eeuwijk of ABN AMRO for his interesting guest article that discusses the provision of simulated results under the GIPS umbrella.
I do hope you enjoy this edition of Focus.