China encourages greater foreign investor participation by means of scrapping its quota limits for its dual channels, QFII and RQFII.
The «Qualified Foreign Institutional Investor» «RMB Qualified Foreign Institutional Investor» programs will now allow funds to flow in and out of the country with just a registration process, according to joint statement by the State Administration of Foreign Exchange (SAFE) and the People’s Bank of China.
With existing cross-border channels in Hong Kong – also known as «Connect» programs founded by the outgoing HKEX chief Charles «Mr. China» ̵ Li – the two mainland-based channels have been relatively underutilized. As of April-end, $114.7 billion of investments were approved compared to the $300 billion quota limit.
A lifted cap aside, regulators are also mulling the expansion of the QFII and RQFII investment scope to include private investment funds, financial futures, commodities futures and options, initial public offerings and secondary stock offerings, according to a consultation paper. The current scope only covers stocks, bonds and warrants, fixed income products in the interbank bond market, securities investment funds and stock index futures.
