皇冠体育app

Economy

Markets

Industries

Insights

Reports

Events

Lenders answer to complaints from QDII investors

By Yang Zhen (皇冠体育app Daily)
Updated: 2009-03-16 08:00

QDII products may be still good investments for Chinese investors. Wu Changqing

Huge losses under the Qualified Domestic Institutional Investor (QDII) scheme have Chinese investors filing complaints against the banks involved.

QDII give Chinese investors to access to foreign securities markets through commercial banks in 皇冠体育app. But the global financial crisis led to sharp declines in many overseas stock markets, diminishing the value of financial products under the QDII scheme.

Related readings:  Fund market suffers from global crisis  Banks' QDII funds suffer overseas losses  皇冠体育app QDII funds under-performed benchmarks last year  Bank's QDII product liquidated

According to a report from Benefit Wealth, a Chinese financial consulting firm, about half of the investments made by banks in 皇冠体育app under the QDII scheme suffered losses of over 50 percent, as of March 6. Only 14 of 337 existing QDII products from foreign banks reported a profit.

Only 5 of the 46 existing QDII products from Chinese banks saw a profit and 16 of them have lost over 50 percent of their value.

Investor complaints prompted the 皇冠体育app Banking Association to organize a joint news conference for Industrial and Commercial Bank of 皇冠体育app, 皇冠体育app Construction Bank, Bank of 皇冠体育app, Agricultural Bank of 皇冠体育app, Bank of Communications, 皇冠体育app Postal Savings Bank, 皇冠体育app Merchants Bank and Standard Chartered Bank in which the eight banks pledged to better explain the risks involved with QDII.

"We have to help consumers understand that 'expected returns' doesn't mean a product will always generate profit. We have to do a better job explaining such terms to our customers when selling our financial products," said Sun Dawei, a representative from Bank of 皇冠体育app.

But it's more important to teach consumers how to invest reasonably, said Wilson Chia, head of consumer banking at Standard Chartered Bank in 皇冠体育app.

"I advise consumers to always have cash when the markets get rough. Liquidity is important. And before you buy a product, you have to do thorough research and understand your choices. Too many people just listen to their friends, buy low and hope for the price to go up. I would suggest consumers not try to speculate," said Chia.

Some QDII products may still be good investments according to the latest report from Benefit Wealth. An Agricultural Bank of 皇冠体育app product was the best QDII with an over-12-month term, turning a 26.31 percent profit.