Opportunities and challenges to the listed companies with the implementation of QFII in China mainland stock markets

摘要

The implementation of QFII increases the money flow into the China mainland stock markets from famous qualified foreign investors with the relaxing regulation on the investment quota, investment region, and currency exchange quota over time. The role-playing by QFII can lead to the gradual rational pricing mechanism of the stocks of listed companies in China stock markets. The restructuring of listed companies will be accelerated to produce new potential investment opportunities. The management level of the listed companies will be enhanced due to the voice of QFII in the meeting of stockholders. But the nature of capital is profit-oriented because the goal of QFII is to maximize the equities of their stockholders no matter the origin of these investments. From the long run perspective, all the regulations on QFII will be rather relaxed and the responsibility for the listed company to control the risks and uncertainty will be augmented over time. Then threats to the listed companies will be tightly bound with the opportunities offered by the implementation of QFII in China mainland stock markets. The multiplier effect of QFII behaviors will dramatically affect the investment behaviors of large quantity of small Chinese investors and institutional investors. The owners' equity of a selected company will be changed radically by the stock-selling actions by QFII. The declining price of the listed company will bear a heavy burden on the owners' equities and the re-funding activities for its further development. Hence, the implementation of QFII in China mainland stock markets has provided dear opportunities for the growth of listed companies while its negative effects should be measured and controlled.