China raises quota for QFII, RQFII scheme to be expanded
By Ye Zhen |
July 13, 2013, Saturday
|
Print Edition
Print Edition
CHINA is to almost double the investment quota to US$150 billion for foreign institutional investors to tap the domestic capital market in an effort to attract more long-term funds and bolster the country's equity market.
The total investment quota for the Qualified Foreign Institutional Investor scheme will be lifted from the previous US$80 billion, China Securities Regulatory Commission told reporters after the market closed yesterday.
The CSRC also said it will expand the trial Renminbi Qualified Foreign Institutional Investor program to Singapore, London and other unnamed cities. Currently, the program is limited to institutions in Hong Kong.
The commission said the quota was increased in the wake of the rapid growth of the QFII scheme this year and is aiming at attracting long-term investors and pushing forward the reform of China's capital market.
"Foreign investors have expressed strong willingness to invest in China's capital market and there is great potential for further opening-up," the commission said.
"The fresh cash approved will provide new momentum to support the rebound of China's stock market," said Francois Guilloux, researcher of Z-Ben Advisors, a Shanghai-based consultancy on China's investment management industry.
Launched in 2002, QFII is a main avenue for foreign institutions to access China's yuan-denominated markets.
Besides lifting the investment quota, Chinese regulators have been accelerating the opening of domestic capital markets to foreign participants by easing requirements on QFII qualifications and speeding up the approval process.
China has granted QFII licenses to 22 foreign institutional investors so far this year, bringing the total QFIIs to 229 with a combined approved quota of US$43.5 billion.
Meanwhile, overseas appetite for China's yuan-denominated equities has been growing with new A-share accounts being opened by QFIIs for a consecutive 18th months in June, data from China Securities Depository and Clearing Corporation showed.
As for the RQFII, the program was introduced in December 2011 with an initial quota of 20 billion yuan (US$3.3 billion) to allow foreign investors to invest in China's capital market with offshore yuan.
The quota has been gradually expanded to a sizable 270 billion yuan in a long-term strategy to promote the yuan as an international reserve currency. Foreign money under QFII and RQFII programs now accounts for 1.6 percent of the market capitalization of the Shanghai and Shenzhen exchanges, data showed.
The total investment quota for the Qualified Foreign Institutional Investor scheme will be lifted from the previous US$80 billion, China Securities Regulatory Commission told reporters after the market closed yesterday.
The CSRC also said it will expand the trial Renminbi Qualified Foreign Institutional Investor program to Singapore, London and other unnamed cities. Currently, the program is limited to institutions in Hong Kong.
The commission said the quota was increased in the wake of the rapid growth of the QFII scheme this year and is aiming at attracting long-term investors and pushing forward the reform of China's capital market.
"Foreign investors have expressed strong willingness to invest in China's capital market and there is great potential for further opening-up," the commission said.
"The fresh cash approved will provide new momentum to support the rebound of China's stock market," said Francois Guilloux, researcher of Z-Ben Advisors, a Shanghai-based consultancy on China's investment management industry.
Launched in 2002, QFII is a main avenue for foreign institutions to access China's yuan-denominated markets.
Besides lifting the investment quota, Chinese regulators have been accelerating the opening of domestic capital markets to foreign participants by easing requirements on QFII qualifications and speeding up the approval process.
China has granted QFII licenses to 22 foreign institutional investors so far this year, bringing the total QFIIs to 229 with a combined approved quota of US$43.5 billion.
Meanwhile, overseas appetite for China's yuan-denominated equities has been growing with new A-share accounts being opened by QFIIs for a consecutive 18th months in June, data from China Securities Depository and Clearing Corporation showed.
As for the RQFII, the program was introduced in December 2011 with an initial quota of 20 billion yuan (US$3.3 billion) to allow foreign investors to invest in China's capital market with offshore yuan.
The quota has been gradually expanded to a sizable 270 billion yuan in a long-term strategy to promote the yuan as an international reserve currency. Foreign money under QFII and RQFII programs now accounts for 1.6 percent of the market capitalization of the Shanghai and Shenzhen exchanges, data showed.
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