China Expands Capital Markets to Foreign Investors

Strategic Insights -

As part of its efforts to open up its capital markets to foreign investment, China's regulatory body has announced that Qualified Foreign Institutional Investors (QFIIs) will be allowed to trade onshore Exchange-Traded Fund (ETF) options starting October 9. This move aims to attract long-term foreign capital to allocate to A-shares by expanding risk management tools and enhancing market stability. The eligible products include E Fund STAR 50 ETF, E Fund ChiNext ETF, and E Fund SZSE 100 ETF, managed by E Fund Management, the largest mutual fund manager in China.

Key Takeaways:

  • The China Securities Regulatory Commission has approved the trading of onshore ETF options for hedging purposes, exclusively for QFIIs starting October 9.
  • The eligible products include E Fund STAR 50 ETF, E Fund ChiNext ETF, and E Fund SZSE 100 ETF, which are managed by E Fund Management.
  • The SSE STAR 50 Index tracks the 50 largest and most liquid stocks on the STAR Market, with 92% of its constituents exposed to strategic sectors like semiconductors.
  • The ChiNext Index comprises 100 high-growth firms from the ChiNext Board, with 92% exposure to strategic sectors like new-generation information technology, new energy vehicle, and healthcare.
  • The Shenzhen 100 Index aggregates 100 blue-chip leaders from the Shenzhen Stock Exchange, with 73% weightage in sectors like advanced manufacturing, digital economy, and green energy.
  • E Fund has positioned itself as the preferred partner for foreign investors with its broad ETF product lineup and low management fees.
  • E Fund's ETF assets grew by US$ 53.5 billion from January 2024 to April 2025, with net inflows totaling US$ 41.2 billion, both ranking first in the market.
  • E Fund Management is a pioneering and leading practitioner in responsible investments in China, widely recognized as one of the most trusted and outstanding Chinese asset managers.

Statistics:

  • The SSE STAR 50 Index has grown to US$ 25.4 billion, making it the fourth-largest broad-based index of A-share market.
  • The ChiNext Index saw its constituents deliver robust revenue and net profit CAGR of 21% and 14% respectively since 2021.
  • Cross-border capital of non-banking sectors saw a net inflow of US$ 33 billion in May, 2025, with foreign holdings of domestic stocks increasing month-on-month.
  • E Fund Management has over RMB 3.5 trillion (USD 497 billion) in assets under management as of March 31, 2025.
  • E Fund's clients include central banks, sovereign wealth funds, social security funds, pension funds, insurance and reinsurance companies, corporates, and banks.

Sources:

  • China Securities Regulatory Commission
  • E Fund Management
  • Wind
  • State Administration of Foreign Exchange
  • People's Bank of China (PBoC)