China plans to raise RQFII quota by 200 billion yuan
Source: Agencies |
November 12, 2012, Monday
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Print Edition
Print Edition
CHINA is planning a nearly three-fold jump in quotas for the Renminbi Qualified Foreign Institutional Investor scheme, which permits qualified investors to channel offshore yuan funds into Chinese mainland stock and bond markets.
The securities regulator also said yesterday that the quota for the Qualified Foreign Institutional Investor scheme - the original, dollar-denominated program that allows institutional investors to buy stakes in Chinese-listed stocks or bonds - could be lifted if its current, US$80 billion limit is reached.
The RQFII quota will be raised by 200 billion yuan (US$32 billion) from the current 70 billion yuan, Guo Shuqing, the head of the China Securities Regulatory Commission, told reporters yesterday.
The increase follows a request by the Hong Kong authorities, Guo said. Most offshore yuan funds are raised in Hong Kong.
"Last week, before the 18th National Congress of the Party started, three main Hong Kong government officials in charge of financial issues raised the issue. 'Can't you expand RQFII again? 70 billion yuan is too small. Can't you raise it by 200 billion?'" said Guo.
He said the central bank and the State Administration of Foreign Exchange have already agreed to the increase and are preparing detailed rules, which will be released soon.
The RQFII program was set up to allow foreign investors to use offshore yuan - which Hong Kong banks have accumulated mainly through yuan-denominated trade settlement - to buy mainland securities.
Regarding the QFII program, Guo said it could also be expanded once the current quota is exhausted.
"We've already reached agreement with the central bank and the SAFE. If the US$80 billion gets used up, we will definitely expand it," Guo said.
The CSRC sets an overall quota for the QFII program and approves foreign institutions as QFIIs, while the SAFE grants quotas to individual institutions. The SAFE has so far granted about US$30 billion, meaning that about US$50 billion in additional quotas could still be granted under the existing quota.
Guo also said that certain individual QFIIs will see their quotas raised. QFII quotas are currently capped at US$1 billion per institution.
"We'll look at individual institutions on a differentiated basis. For very big institutional investors, in the past we allowed them to invest at most US$1 billion. Now we'll expand the limit to US$2 billion, US$3 billion, even US$5 billion," he said.
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