The final approval for overseas investment in China's local-currency Class-A shares failed to trigger an immediate upsurge on the mainland's two bourses as only a limited amount of foreign funds will trickle in the markets in the near future, analysts said.

On Monday, China's securities regulator named Nomura Holdings Inc and UBS AG as the first overseas investors allowed to buy yuan-denominated shares under the Qualified Foreign Institutional Investor system, opening Asia's second-biggest capital market to international funds.

But investors reaction to the news was lukewarm yesterday as share prices in Shanghai and Shenzhen ended nearly unchanged. The Shanghai Composite Index, which tracks both Class-A and B shares, shed 0.07 percent to close at 1568.34. The Shenzhen Sub-index dropped 0.41 percent to 3488.85.

Blue-chip stocks, including steel-makers, auto manufacturers and banks, which are expected to draw most of the foreign investment, fell yesterday on profit taking following whopping gains on anticipation of the news.

Laiwu Steel Corp fell 2.2 percent to 7.12 yuan (86 US cents) and Changchun FAW Sihuan Automobile Co Ltd was off 1.37 percent to 13 yuan yesterday.

Analysts don't expect the news to affect markets much in the near future as it has been well digested by the market.

"It has been a pretty long time since the announcement of the QFII rule in November last year," said Wu Kan, head of investment consulting at Shanghai Securities Consulting Co Ltd.

The "go-slow approach" will also be adopted by UBS Warburg.

"Although there was a strong demand from clients for China stocks, UBS will take a go-slow approach to building positions in the Class A-share markets," said Matthew Mcgrath, spokesman for UBS Warburg.

He said the company expects to invest at a consistent but modest pace instead of pumping a large amount of money into the market in one shot.

"We will begin to invest as soon as the remaining paperwork is finished in a matter of weeks," he said.

Mcgrath declined to reveal how much money UBS will initially channel into the A-share market, saying the volume is driven by demand from clients.

The research team at UBS will begin covering 50 A-share stocks by the end of this year, he added.

Nomura said it will initially invest US$50 million in the A-share market, but declined to give any further details.

Both UBS and Nomura have hired Citibanks as their custodian bank.

On November 8 last year, the China Securities Regulatory Commission, together with the People's Bank of China, unveiled the QFII scheme, under which foreign finance institutions with at least US$10 billion in asset are allowed to apply to buy stocks in 1,200-plus firms trading yuan-denominated Class-A shares on the Shanghai and Shenzhen markets.

They can also buy into some mutual funds, bonds and initial public offerings.

Other overseas companies awaiting approval to buy Chinese stocks are Deutsche AG, Morgan Stanley, Goldman Sachs Group Inc, HSBC Holdings Plc, Citigroup Inc and Standard Chartered Plc.