China Expedites Qualified Foreign Institutional Investor (QFII) Approvals

Strategic Insights -

China's State Administration of Foreign Exchange has accelerated the pace of approving Qualified Foreign Institutional Investor (QFII) applications, with 21 QFIIs granted qualification and 19 receiving investment quotas totaling US$2.85 billion. Meanwhile, China is considering expanding the QFII experiment, potentially ending it and implementing it on a full scale. A special team has been set up to improve the experiment, and the Interim Rules for Administration of Securities Investment may be revised.

Key Takeaways:

  • The State Administration of Foreign Exchange has approved two QFIIs, ABN Amro Bank and Societe Generale, with investment quotas of US$75 million and US$50 million, respectively.
  • Twenty-one organizations have been granted QFII qualification, with two, Barclays Bank and Inveso Asset Management Ltd., still awaiting investment quotas.
  • The authorities are speeding up QFII approvals, with three QFIIs receiving additional investment quotas totaling US$600 million in the past month.
  • China may expand the QFII experiment, potentially implementing it on a full scale, following the submission of a report to the State Council.
  • A special team has been established to improve the experiment, and the Interim Rules for Administration of Securities Investment may be revised.
  • More specialized asset management companies, such as fund management companies and pension management organizations, are encouraged to invest in the Chinese securities market.
  • The investment quotas for QFIIs may be administered by category.

Statistics:

  • 21 QFIIs have been granted qualification.
  • 19 QFIIs have received investment quotas totaling US$2.85 billion.
  • The State Administration of Foreign Exchange has approved QFII investment quotas of US$75 million, US$50 million, US$200 million, and US$600 million.
  • 10 overseas organizations have applied for QFII qualification.
  • Most existing QFIIs have applied for adding quotas.

Sources:

  • China's State Administration of Foreign Exchange
  • China Securities Regulatory Commission (CSRC)
  • XIC (Xinhua News Agency) September 24, 2004