Growing ranks of qualified foreign institutional investors (QFIIs) have benefitted China's capital markets in such areas as greater liquidity and advanced trading strategies.

But they have yet to display the willingness for long-term investment that local regulators are expecting, a senior official with the Shanghai Stock Exchange said yesterday.

"From a regulator's point of view, QFIIs have been doing a good job of investing," said Fang Xinghai, deputy general manager of the exchange. "They have demonstrated excellence in their judgment on macroeconomic cycles and industrial cycles as well as the value of listed companies."

China has so far approved 24 QFIIs, which were allowed to invest in the domestic A-share stock market two years ago.

Their investment quotas total US$3 billion.

"But we have yet to see a willingness to make long-term investments," Fang said, citing the QFIIs' rapid buying and selling activities.

"That can be associated with the expectations for a renminbi appreciation, and can be associated with the real investors behind them, who can be short-term investors themselves," he said.

(China Daily December 3, 2004)