Published On: Sun, May 6th, 2012

China QFII Update

Asia Etrader Issue 2This Article Appeared in Issue 2 of the Asia Etrader Magazine (View)

The QFII (Qualified Foreign Institutional Investor) quota received a much needed and long overdue boost on April 3 when the China Securities Regulatory Commission (CSRC) announced it was increasing the quota from US30 billion to US80 billion. While the amount is still quite small, overall, it signals a continued shift in the willingness of the CSRC to continue to open up China’s capital markets. In another sign, in March, 15 firms were granted a record US2.1 billion in just one month when in the whole of 2011 just US1.9 billion was granted. According to our list below US24.6 billion of the quota has been granted so far accounting for around 1.1 percent of the total market capitalization of domestic A-share market according to a note issued by the regulator. Granting of quota is the function of State Administration of the Foreign Exchange (SAFE).

While the measures do promote the internationalization of the renminibi (RMB) we believe the move by the CSRC is to prop up the flagging stock market in China. The Shanghai Composite Index (SHCOMP) of domestic stocks has lost more than 60 percent from its peak in 2007. While the economy is expected to have grown at 8.4% in the first quarter the government is trying to drive growth in its export oriented economy. The central government has also committed to freeing up control of the Yuan and liberalize interest rates in its further attempts to deepen reform and to revive growth.

Under the QFII scheme, which was launched in 2003, it allows foreign investors to buy Chinese stocks and bonds. The CSRC extended the acceptable assets to include the CSI 300 index future but that hasn’t appeared to materialize to date. Qualified institutions include foreign banks, securities firms, asset managers, insurance companies, pension funds, charity funds and sovereign funds. To take part in the QFII program, eligible firms must first convert foreign currency to RMB before placing the funds with a custodian. Profits from the investments must then be converted back to another foreign currency before being repatriated out of the country. Taking foreign money out of China has proven difficult and is subject to restrictions.

RQFII Rules
The Renminbi Qualified Foreign Institutional Investors rules were announced 16 December 2011 jointly by CSRC, SAFE and the People’s Bank of China. The RQFII Rules permit Hong Kong subsidiaries of qualified Chinese fund management and securities companies to use funds raised in RMB in Hong Kong to invest in mainland securities. The Hong Kong subsidiaries are required to satisfy certain conditions in order to qualify for a quota under the RQFII scheme. The initial quota was set at US 3 billion. Besides being allowed to invest in the same asset classes as the QFII access to China IPOs will be granted. There is a restriction that at least 80% of funds must be invested in fixed income products giving a boost to the debt market.

QFII Name Date Quota
UBS AG 5/23/2003 790
Nomura Securities Co. 5/23/2003 350
Morgan Stanley & Co. International Limited 6/5/2003 400
Citigroup Global Markets Limited 6/5/2003 550
Goldman 7/4/2003 300
Deutsche Bank Aktiengesellschaft 7/30/2003 400
The Hongkong and Shanghai Banking Corporation 8/4/2003 400
ING Bank N.V. 9/10/2003 400
JPMorgan Chase Bank 9/30/2003 150
Credit Suisse (HongKong) Limited 10/24/2003 500
Standard Chartered Bank (HongKong) Limited 12/11/2003 75
Nikko Asset Management Co. 12/11/2003 450
Merrill Lynch International 4/30/2004 300
Hang Seng Bank Limited 5/10/2004 100
Daiwa Securities Capital Markets Co. 5/10/2004 50
Lehman Brothers International (Europe) 7/6/2004 200
Bill & Melinda Gates Foundation 7/19/2004 300
INVESCO Asset Management Limited 8/4/2004 350
The Royal Bank of Scotland N.V. 9/2/2004 175
Société Générale 9/2/2004 50
Barclays Bank PLC 9/15/2004 400
Commerzbank AG 9/27/2004 75
Fortis Bank NV-SA 9/29/2004 500
BNP Paribas 9/29/2004 200
Power Corporation of Canada 10/15/2004 50
Credit Agrigole Corporate and Investment Bank 10/15/2004 75
Goldman Sachs Asset Management International 5/9/2005 500
Martin Currie Investment Management Ltd 10/25/2005 120
Government of Singapore Investment Corporation 10/25/2005 400
PineBridge Investment LLC 11/14/2005 150
Temasek Fullerton Alpha Investments Pte Ltd 11/15/2005 300
JF Asset Management Limited 12/28/2005 375
The Dai-ichi Life Insurance CompanyLimited 12/28/2005 200
DBS Bank Ltd 2/13/2006 100
AMP Capital Investors Limited 4/10/2006 300
The Bank of Nova Scotia 4/10/2006 150
KBC Financial Products UK Limited 4/10/2006 20
La Compagnie Financierr Edmond de Rothschild 4/10/2006 200
Yale University 4/14/2006 150
Morgan Stanley Investment Management Inc. 7/7/2006 450
Prudential Asset Management (Hongkong) Limited 7/7/2006 300
Stanford University 8/5/2006 100
GE Asset Management Incorporated 8/5/2006 350
United Overseas Bank Limited 8/5/2006 50
Schroder Investment Mangement Limited 8/29/2006 300
HSBC Global Asset Management (Hong Kong) Limited 9/5/2006 450
Mizuho Securities Co. 9/5/2006 50
UBS Global Asset Management (Singapore) Ltd 9/25/2006 250
Sumitomo Mitsui Asset Management Company 9/25/2006 350
Norges Bank 10/24/2006 700
Pictet Asset Management Limited 10/25/2006 100
The Trustees of Columbia University NYC 3/12/2008 100
Prudential Asset Management Co. 4/7/2008 75
Robeco Institutional Asset management B.V. 5/5/2008 150
State Street Global Advisors Asia Limited 5/16/2008 50
Platinum Investment Company Limited 6/2/2008 150
KBC Asset Management N.V. 6/2/2008 210
Mirae Asset Global Investments Co. 7/25/2008 250
ACE INA International Holdings 8/5/2008 150
Caisse de dép?t et placement du Québec 8/22/2008 200
President and Fellows of Harvard College 8/22/2008 200
Samsung Investment Trust Management Co. 8/25/2008 300
AllianceBernstein Limited 8/28/2008 150
Oversea-Chinese Banking Corporation Limited 8/28/2008 150
First State Investment Management (UK) Limited 9/11/2008 120
DAIWA Asset Management Co. 9/11/2008 200
Shell Asset Management Company B.V. 9/12/2008 0
T. Rowe Price International 9/12/2008 110
Credit Suisse AG 10/14/2008 300
UOB Asset Management Ltd 11/28/2008 50
ABU Dhabi Investment Authority 12/3/2008 200
Allianz Global Investors Luxembourg S.A. 12/16/2008 100
Capital International 12/18/2008 100
Mitsubishi UFJ Morgan Stanley Securities Co. 12/29/2008 100
Hanwha Investment Trust Management Co. 2/5/2009 70
Emerging Markets Management 2/10/2009 50
DWS Investment S.A. 2/24/2009 200
The Korea Development Bank 4/23/2009 100
Woori Bank Co. 5/4/2009 50
Bank Negara Malaysia 5/19/2009 200
Lloyd George Management (Hong Kong) Limited 5/27/2009 50
Templeton Investment Counsel 6/5/2009 200
BEA Union Investment Management Limited 6/18/2009 100
The Sumitomo Trust & Banking Co. 6/26/2009 50
Korea Investment Trust Management Co. 7/21/2009 100
Baring Asset Management Limited 8/6/2009 200
Ashmore Investment Management Limited 9/14/2009 200
BNY Mellon Asset Management International 11/6/2009 150
Manulife Asset Management (Hong Kong) Limited 11/20/2009 200
Nomura Asset Management CO. 11/23/2009 200
Tongyang Asset Management Corp. 12/11/2009 100
Royal Bank of Canada 12/23/2009 100
Aviva Investors Global Services Limited 12/28/2009 100
Ivy Investment Management Company 2/8/2010 100
DIAM Co. 4/20/2010 100
OFI Asset Management 5/21/2010 150
Aberdeen Asset Management Asia Limited 7/6/2010 200
KB Asset Management Co. 8/9/2010 100
Fidelity Investments Management (Hong Kong) 9/1/2010 150
Legg Mason Investements (Europe) Limited 10/8/2010 100
Hong Kong Monetary Authority 10/27/2010 300
Fubon Securities Investment Trust Co. Ltd. 10/29/2010 100
Capital Securities Investment Trust Corporation 10/29/2010 100
BMO Investments Inc. 12/6/2010 100
Bank Julius Bear & Co.  2/14/2010 100
KTB Asset Management Co. 12/28/2010 100
Lyxor Asset Management 2/16/2011 100
Polaris International Securities Investment Co. 3/4/2011 100
Assicurazioni Generali S.p.A. 3/18/2011 100
Banco Bilbao Vizcaya Argentaria 5/6/2011 100
Cathay Securities Investment Trust Co. 6/9/2011 100
Fuh Hwa Securities Investment Trust Co. Ltd.  6/9/2011 100
Comgest S.A. 6/24/2011 100
Amundi Hong Kong Limited 7/14/2011 100
BlackRock Institutional Trust Company 7/14/2011  N/A
Grantham 8/9/2011 100
Monetary Authority of Singapore 10/8/2011 100
China Life Insurance Co. 10/26/2011 100
Shin Kong Life Insurance Co. 10/26/2011 100
Princeton University 11/25/2011 50
Shinko Asset Management Co. 11/25/2011 100
Canada Pension Plan Investment Board 12/9/2011 100
Van Eck Associates Corporation 12/9/2011  N/A
Hansberger Global Investors 12/13/2011  N/A
EARNEST Partners LLC 12/13/2011  N/A
Bank of Thailand 12/16/2011 300
Kuwait Investment Authority 12/21/2011 300
Northern Trust Global Investments Limited 12/21/2011  N/A
Taiwan Life Insurance Co. 12/21/2011 100
The Bank of Korea 12/21/2011 300
Ontario Teachers’ Pension Plan Board 12/22/2011 100
Korea Investment Corporation 12/28/2011 200
Russell Investments Ireland Limited 12/28/2011  N/A
Metzler Asset Management GmbH 12/31/2011  N/A
HI Asset Management Co. 12/31/2011  N/A
Shinhan BNP Paribas Asset Management Co. 1/5/2012 100
Stichting Pensioenfonds voor Huisartsen 1/5/2012 60
National Pension Service 1/5/2012 100
Mercuries Life Insurance Co 1/30/2012  N/A
Prudential Financial Securities Investment Trust 1/31/2012  N/A
Principal Global Investors LLC 1/31/2012  N/A
Hospital Authority Provident Fund Scheme 1/31/2012  N/A
TransGlobe Life Insurance Inc. 2/3/2012  N/A
Public Mutual Berhad 2/3/2012  N/A
Meiji Yasuda Asset Management Company Ltd.  2/27/2012  N/A
Cathay Life Insurance Co. 2/28/2012  N/A
Sumitomo Mitsui Banking Corporation 2/28/2012  N/A
Source: China Securities Regulatory Commission (CSRC)

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