China Makes Life Easier for Foreign Institutional Investors
* New rules will make it easier for foreign institutional investors to move money out of the country
* Qualified foreign investors will also be allowed to conduct foreign exchange hedging in China to offset risk from forex movements
China published revised rules Tuesday to ease restrictions on qualified foreign investors in the country’s latest move to liberalize its domestic capital markets.
The new rules (Link in Chinese), published by the State Administration of Foreign Exchange, take effect immediately and will make it easier for foreign institutional investors to move money out of the country.
The new rules scrap a 20% monthly cap on moving assets out of the mainland for dollar-dominated Qualified Foreign Institutional Investor (QFII) participants. A requirement for a three-month lockup period for investment principal under the QFII program and its yuan-denominated Renminbi Qualified Institutional Investor program is also being removed, SAFE said.
Investors in the QFII and RQFII programs can now send money out of China based on their investment needs and will also be allowed to conduct foreign exchange hedging in China to offset risk from forex movements, the regulator said.
The easing comes shortly after U.S. index publisher MSCI on June 1 officially included 226 China-listed shares in its Emerging Markets Index, a long-sought move for China to get greater exposure of its domestic capital market to foreign investors. Global funds that mirror the MSCI indexes will now be required to buy shares of China-listed companies included in those indexes.
Restrictions on market accessibility and repatriation have been the main concerns for overseas investors in China as the country’s capital account has not yet been fully opened.
China launched the QFII program over a decade ago to allow eligible global investors to invest in the mainland's capital market with certain quotas. In 2011, the sibling RQFII program was introduced to allow financial institutions to use offshore yuan to buy securities in mainland markets.
SAFE data showed that as of the end of May, 287 overseas institutions had received quotas totaling $99.46 billion under the QFII program, while quotas in the RQFII program totaled 615.85 billion yuan ($96.2 billion) for 196 foreign institutional investors.
China has been stepping up efforts to liberalize its capital market and open the door wider for both foreign and domestic investors. During the Boao Forum for Asia Annual Conference in April, China’s central bank governor, Yi Gang, indicated that the currently “stable” cross-border capital flows provided a window of opportunity for the government to push forward reforms.
In April, SAFE issued new quotas for the Qualified Domestic Institutional Investor (QDII) program — which allows Chinese firms to invest in offshore securities — for the first time in three years. The regulator also raised the quota for the QDII program as well as two other pilot programs that allow Chinese investors to put their money into overseas assets.
Contact reporter Han Wei (firstname.lastname@example.org)
May 26 17:38
May 26 17:03
May 26 12:26
May 26 10:44
May 26 03:26
May 25 17:58
May 25 16:46
May 25 12:39
May 23 06:20
May 21 17:58
May 21 13:02
May 21 11:15
May 20 21:56
May 20 16:24
May 20 12:59
- 1China’s ‘Bat Woman’ Warns Coronavirus Is ‘Just Tip of the Iceberg’
- 2Flying to China Still a Challenge as Authorities Extend Restrictions
- 3New Huawei Sanctions by U.S. Are Less Than Meet the Eye, Lawyers Say
- 4China’s New Outbreak Shows Signs the Virus May Be Changing
- 5Update: China Scraps GDP Growth Target, Boosts Budget Deficit Amid Coronavirus Pandemic
- 1Power To The People: Pintec Serves A Booming Consumer Class
- 2Largest hotel group in Europe accepts UnionPay
- 3UnionPay mobile QuickPass debuts in Hong Kong
- 4UnionPay International launches premium catering privilege U Dining Collection
- 5UnionPay International’s U Plan has covered over 1600 stores overseas