“China scrapped a ceiling on investments by overseas sovereign wealth funds and central banks in its capital markets, part of government efforts to encourage long-term foreign ownership and shore up slumping equities.
Sovereign funds, central banks and monetary authorities can now exceed the $1 billion limit that still applies to other qualified foreign institutional investors, according to revised regulations posted Dec. 14 on the State Administration of Foreign Exchange’s website. The statement did not mention a new ceiling or an increase in the total investment quota allowed under the program also known as QFII.
The removal of the investment limit on sovereign investors “marks another step in the direction to gradually open up China’s capital account,” Wang Aochao, head of research at UOB Kay Hian Investment Consulting (Shanghai) Co., said by telephone today. “It’s part of a gradual process. QFII money still accounts for a very small fraction of China’s capital markets.”
China would “definitely” expand the foreign-currency quota provided under the QFII program once the current allotments of $80 billion are filled, Guo Shuqing, chairman of the China Securities Regulatory Commission, said last month. Regulators have since 2003 approved a combined QFII quota of $36.04 billion as of Nov. 30 under the program which allows foreign investors to buy yuan-denominated securities, the SAFE said on Dec. 11.”
If you enjoy the content at iBankCoin, please follow us on Twitter
