RQFII rules relaxed as China lowers barriers

Chinese flagChina has relaxed rules by which foreign investors can deploy offshore renminbi in onshore assets in another step towards opening its markets.

The changes to the renminbi qualified foreign institutional investor (RQFII) programme address some of the complaints raised by index provider MSCI, which opted not to include Chinese mainland-listed shares in its widely followed Emerging Markets index earlier this year.

The new rules bring the RQFII scheme in line with the reforms made in February to the QFII programme, a predecessor scheme which allows qualifying investors to buy mainland assets in dollars.

"The steps are clearly in the right direction," said David Raper, manager of the Comgest Growth Greater China fund, of the RQFII rules and other reforms. "This is what MSCI needed to see."

According to the new rules from the State Administration of Foreign Exchange, licensed RQFII investors will receive an investment quota based on their assets under management (AUM). If their assets are mostly held outside China, RQFII holders or their parent companies will receive an initial quota of $100 million plus 0.2% of their AUM, calculated as an average over the past three years, minus any quota held under the QFII scheme.

RQFII holders whose assets are mostly held inside China will receive an initial quota of 5 billion renminbi ($749 million) plus 80% of their AUM the previous year minus any QFII quota.

In addition, certain foreign institutions such as registered sovereign wealth funds, central banks and monetary authorities will face no quota limits at all.

In the past, China awarded RQFII quotas to foreign territories which would be shared between all investors domiciled in that territory.

©2016 funds global asia


A quiet revolution in Japan’s corporate governance

revolution, Japan, corporate governance, Shareholders, corporate, governance, standards, improvement, Tetsuro Takase, SuMi TrustShareholders in Japan no longer accept below-par corporate governance standards. Changes...

Why rising demand for healthcare is creating investment opportunities in China

rising demand, healthcare, investment, opportunities, China, Robert St Clair, Investment Strategy, Fullerton Fund ManagementRobert St Clair, head of investment strategy at Fullerton Fund Management, explores the...

Why take advantage of the recent dip in China’s internet sectors

advantage, China, internet, market, OctoberChina's internet market presents one of the most compelling long-term growth potentials for investors today, given the catalysts supporting the...

India’s growing importance to the global economy

India, importance, global economy, Apple, iPhone, ChinaThe China Plus One narrative might affect “the world’s factory” and give opportunities for India and other countries well-placed to assume...

Executive Interviews

Executive interview: PGIM CEO on where the ESG flowers should bloom

Sep 27, 2021

David Hunt, president and chief executive of PGIM, tells Romil Patel about leading a top 10 global asset manager in times where “empowering and encouraging the kind of investment decisions as...

Executive interview: Nicolas Moreau’s orderly transition

Jul 12, 2021

Nicolas Moreau, CEO of HSBC Asset Management, is moving to Asia as the firm looks to connect more directly with the region’s growth story. ESG is also a key focus – including the ‘just’ carbon...


Roundtable: Singapore comes of age as an Asian ESG hub

Dec 01, 2021

Strong ESG credentials strengthen the case for Singapore as a leader in Asia of the post-Covid recovery. Our panel discusses the risks and opportunities.

Roundtable: How well geared are Japanese assets for a new world?

Jul 12, 2021

As we prepare to emerge from Covid, experts look at overcoming demographic issues through a combination of good tech and corporate governance, improving productivity and meeting an ambitious government carbon emissions reduction target. Chaired by Romil Patel.