China has expanded avenues for domestic players to invest abroad via sizeable increases in the quota for Qualified Domestic Institutional Investors (QDII) over the past several months.
On 30 November the State Administration of Foreign Exchange (SAFE) announced that it plans to allocate a further USD$4.296 billion in QDII quotas to 23 institutions in China, including fund companies, securities firms, banks, bank wealth management subsidiaries and trust companies, according to a report from Yicai.
QDII’s are domestic institutional investors in China that have obtained approval from regulators to invest in offshore securities and bonds, under a scheme first launched in 2006 and overseen by the China Securities Regulatory Commission (CSRC) and the China Banking and Insurance Regulatory Commission (CBIRC).
The system provides Chinese retail investors with their main channel for accessing overseas securities markets, via the purchase of products sold by QDII’s.
Since September SAFE has launched three rounds of quota releases for QDII’s, providing USD$12.716 billion in quotas to 71 institutional investors in China.
The latest round of quotas will bring the total investment quota to USD$116.699 billion, and the number of approved QDII’s to 169.
Domestic analysts say that the expansion of QDII quotas will be help to facilitate bilateral cross-border capital flows, amidst ongoing efforts by Beijing to further open up the Chinese financial sector.