Walter Hutchens’ Blog

The Bill and Melinda Gates Foundation has been approved by the China Securities Regulatory Commission (CSRC) for qualified foreign institutional investor (QFII) status, which will allow the foundation to invest directly in China’s A-share stock market. The CSRC announcement is here.

Bei Hu of the South China Morning Post reports this development here.

The Chinese no doubt love the idea that the world’s richest man has directed his foundation to invest in China. The implication is that if Bill Gates thinks it is smart to invest in China’s stock market he must be right.

Gates on the other hand must be currying favor with China. If the foundation simply wanted to invest in China for economic reasons, it could do so through one of the existing QFIIs. Maybe Gates’ people think this will help them fight Linux in China or accomplish some other corporate goal.

China’s State Administration of Foreign Exchange (SAFE) will now have to issue an investment quota to the foundation, telling it how much money it will be permitted to bring into China. SAFE announced yesterday the investment quota for Merrill Lynch, another QFII. They are approved to bring in USD 75 million.

When investments by some QFIIs have been disclosed, the PRC press has widely reported on them. I suspect the Gates Foundation’s stock picks will be of interest to many Chinese, too.

While the QFII program allows some foreign capital to flow into (and to a lesser extent out of) China’s stock markets, the news I am waiting on is that foundations in China can be set up without government approval, or that PRC citizens can use their RMB to buy shares in Microsoft. One day . . .