China Eases QFIIs Qualification; Not to Introduce Hedge Funds


China has eased restrictions on foreign investors seeking to invest in the country’s securities markets, as part of its boarder reforms of the country’s financial sector, the official Shanghai Securities Journal reported, citing a regulator’s conference.

New measures will allow more than one investor belonging to the same parent equity to acquire the Qualified Foreign Institutional Investor licenses and grant higher quota for structured products.

The China Securities Regulatory Commission has also decided to lift the bar on the proportion of assets into the stock market, given weakening expectations on the yuan’s appreciation after a wider trading band for the yuan against the U.S. dollar, the report said. China required foreign investors to part at least 50 percent of their assets into the stock market to prevent QFIIs from over-investing in the country’s bond market to profit from yuan appreciation.

The CSRC isn’t considering offering hedge funds, widely criticized for stoking volatility in markets, direct access to China’s markets, the report added, as it has long encouraged long-term investors such as foreign insurers and pension funds to invest directly in the country’s stocks and bonds.

Ending May 8, China had approved 26 billion U.S. dollars in QFII quotas, up 820 million from April’s 25.2 billion, the latest data published by the CSRC showed.

The CSRC has granted a total of 167 QFII licenses, boosting total assets under the QFII accounts to 274.4 billion.

The CSRC raised the combined investment quota for QFII to 80 billion U.S. dollars from the current ceiling of 30 billion U.S. dollars last month; it also pledged to expand fertilize the operations of the QFII program to attract more long-term investors into China’s capital markets.


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