China Allows Yale to Invest in Domestic Markets
NEW HAVEN, Conn.
The Chinese government has authorized Yale University to trade domestic stocks and bonds, making it the first foreign university granted access to the country’s tightly restricted securities market.
The approval, announced this week in the state-run Shanghai Daily and confirmed Wednesday by the university, allows Yale’s endowment investors to tap one of the world’s fastest growing economies.
It also underscores the increasingly tight-knit relationship between China and the prestigious American university, a relationship marked by Chinese President Hu Jintao’s scheduled visit to the school today (Friday).
China allows foreign investors to buy a limited number of stocks and bonds, called B-shares, which are quoted in American and Hong Kong dollars. The much larger domestic stock exchange, which trades stocks known as A-shares, is restricted to Chinese investors and a select group of approved foreign institutions.
Yale’s $15 billion endowment is one of the world’s largest and has more than tripled in value in the past decade.
“It’s an opportunity to participate in the growth of the Chinese economy,” Yale President Richard Levin said Wednesday.
Institutions that win approval to buy A-shares are limited in how much they can invest and the size of Yale’s stake was not immediately released.
This week, Hu said the Chinese economy grew 10.2 percent in the first three months of the year compared with the same quarter last year, well above previous estimates. The nation’s economy has grown at an annual pace of about 10 percent for the past three years.
That rapid expansion hasn’t translated to a booming stock exchange and China has been trying to breathe life into its markets, which have been among Asia’s worst performers in recent years. The government has slowly granted access to foreign investors, hoping they will demand greater discipline and transparency from listed companies, which are largely state-owned.
Levin predicts that Western investors would push for more openness from Chinese companies.
Yale’s relationship with China dates to 1854, when Yung Wing became the first Chinese citizen to graduate from an American university.
Levin has dramatically expanded that relationship in recent years. Today, the university has more than 80 academic collaborations with Chinese institutions and offers 26 study sites in China.
More than 300 of Yale’s 11,000 students are Chinese, making them the largest group of foreign students at the school.
— Associated Press
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