April 12, 2018 / 2:00 AM / in 3 months

China revives QDII outbound investment scheme -paper

SHANGHAI, April 12 (Reuters) - China’s foreign exchange regulator has invited financial institutions to seek new quotas under its Qualified Domestic Institutional Investor (QDII) scheme, reviving the outbound investment programme after a three-year hiatus, the Securities Times reported on Thursday.

China’s State Administration of Foreign Exchange (SAFE) has recently met with banks, insurers, securities firms and mutual fund houses to discuss QDII quota issuance, the official newspaper said, citing participants.

SAFE said on Wednesday it was studying QDII reform and would improve macro-prudential management of the investment scheme.

The Securities Times said regulators will cap an institution’s total QDII quota at 8 percent of its fund assets, excluding money market funds.

Institutions will not be allowed to apply for a fresh quota if it has used up less than 70 percent of its existing allocation.

The QDII scheme was created by China to allow domestic investors to invest overseas. The scheme had about $90 billion issued to institutions at the end of March.

No new QDII quotas have been granted since 2015, when China’s stock market crash triggered massive capital outflows.

Earlier this year, China resumed Qualified Domestic Limited Partnership, another outbound investment scheme, signaling Beijing is less worried about capital outflows. (Reporting by Samuel Shen and John Ruwitch Editing by Eric Meijer)

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