China steps up pace of foreign fund approvals

SHANGHAI, Sept 13 (Reuters) - China's securities regulator, seeking to support a slumping stock market, has given approval for six more foreign institutions to invest in Chinese securities.

The licensing of the six institutions in August marks the fastest monthly pace of approvals in nearly four years, the official Shanghai Securities News said on Saturday.

It brings to 65 the total number of investors in China's Qualified Foreign Institutional Investor scheme, which was launched in 2003 as the main way for foreigners to buy Chinese equities.

The newly approved investors still need to obtain currency quotas from China's foreign exchange regulator. Individual quotas are commonly around $100 million to $200 million, and quotas issued so far total roughly $11 billion.

China agreed in talks with the United States late last year to raise the ceiling for the combined quota to $30 billion from $10 billion. But it has been reluctant to grant new QFII licences rapidly, partly because large inflows of foreign funds could destabilise its markets.

In the past two months, however, a plunge of the main stock index .SSEC to 21-month lows, down 66 percent from last October's peak, has prompted the securities regulator to promise to bring in more foreign funds to help stabilise stock prices.

Meanwhile, slowing appreciation of the yuan CNY=CFXS against the dollar has threatened to trigger net capital outflows from China, potentially giving the foreign exchange regulator more room to permit inflows into the country.

Foreign investors cannot bring in enough money to make much of an impact on China's stock market; combined QFII quotas are equivalent to less than 1 percent of market capitalisation.

But foreigners were among the first investors to start pulling out of the market as it peaked late last year, so signs of fresh buying by them could boost local investors' confidence.

The six QFII institutions approved in August include ACE INA International Holdings, an affiliate of New York-listed insurer ACE Ltd (ACE.N), Canada's Caisse de depot et placement du Quebec, and the corporation running Harvard University in the United States, according to the securities regulator's website.

The others are South Korea's Samsung Investment Trust Management Co, AllianceBernstein (AB.N) of the United States, and Singapore's Oversea-Chinese Banking Corp (OCBC.SI). (Editing by Ben Tan))