China lets foreign institutions invest more in its markets in third quarter

By Reuters

Sep 26, 2014 07:02 AM EDT

China boosted the quotas it gives foreign institutions to invest in domestic securities by the largest amount in the third quarter since the final quarter of 2012 and regulators may also raise the limit on a parallel yuan-denominated program.

China accelerated quotas awarded under the Qualified Foreign Institutional Investor (QFII) program as the quarter progressed, adding $2.5 billion in September, according to State Administration of Foreign Exchange (SAFE) data released on Friday. The total outstanding quota is now $62.2 billion.

Regulators gave the largest award of the month to the Hong Kong Monetary Authority, adding $1 billion to take its quota to $2.5 billion.

China is also considering raising quotas for foreign investors under the separate Renminbi Qualified Foreign Institutional Investor (RQFII) program as Hong Kong-based investors have almost exhausted their allocations, Guo Song, the head of SAFE's capital account department, said on Thursday.

Launched in 2011, the RQFII scheme allows financial institutions to use offshore yuan to invest in the mainland's securities markets, including stocksbonds and money market instruments.

Under the scheme, Beijing has granted a quota of 270 billion yuan ($44 billion) to Hong Kong, 50 billion yuan to Singapore, 80 billion to London and 80 billion to Paris.

Data for September released by SAFE on Friday showed that while investors in Hong Kong had exhausted their quota, investors in Singapore and London had plenty left. It did not provide estimates for Paris.

"The outstanding quota (granted to Hong Kong) is limited indeed. We are working with other departments to study related issues," Guo said.

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