HONG KONG Feb 5 China allocated 3 billion yuan ($481 million) in quotas last month to foreign institutional investors to put offshore yuan holdings into mainland securities markets, as Beijing steps up the opening up of its capital account.
The allotment completes the divvying up of 70 billion yuan in quotas approved for the Renminbi Qualified Foreign Institutional Investor (RQFII) scheme, and raises expectations that the details of the next tranche of 200 billion yuan in quotas will soon be announced.
The RQFII programme, launched at the end of 2011, allows foreign access to onshore capital markets via bond funds and exchange-traded funds (ETFs) denominated in yuan.
Asset management firms E Fund (Hong Kong) and China Asset Management (Hong Kong) were each awarded 1 billion yuan quotas by China's State Administration of Foreign Exchange. Harvest Global Investments received a 350 million yuan quota and Huatai Financial Holdings (Hong Kong) was granted 650 million yuan.
China introduced the RQFII scheme with an initial quota of 20 billion yuan in late 2011, with each firm allowed to put no more than 20 percent in the onshore stock market while the remainder was to be invested in fixed income. The quota was raised by 50 billion yuan last April, with the entire amount to be invested in the stock market through ETFs.
Guo Shuqing, the head of the China Securities Regulatory Commission (CSRC), said in November that the RQFII quota would be raised by a further 200 billion yuan, although he gave no specifics on who would get the quota or what products could be purchased.
Fund managers involved in the programme, however, have called for greater flexibility on products, to attract more investors.
"It would be ideal if the government only controls the quota for offshore yuan to flow back to the onshore capital market, but lets us design different kinds of products ourselves," said a portfolio manager in Hong Kong.
The world's second-largest economy is stepping up its efforts to open the onshore market to foreign investors, announcing plans last week to allot up to 100 billion yuan in new RQFII quotas to Taiwanese investors. ($1 = 6.2328 Chinese yuan) (Reporting by Michelle Chen; Editing by Edmund Klamann)