According to the State Administration of Foreign Exchange’s notice on 10th, approved by the State Council, this Chinese forex regulator decided to lift the investment quota restrictions on the Qualified Foreign Institutional Investor (QFII) and the Renminbi Qualified Foreign Institutional Investor (RQFII) schemes. Meanwhile, the RQFII pilot country program and its geographic limitations will also be removed.
In recent years, the Administration has made three revisions to the schemes’ rules on foreign exchange, increasingly deregulating and streamlining investment approval and currency conversion. By the end of August 2019, total QFII investment reached $300 billion, and $111.376 billion from 292 QFIIs was approved. The RQFII program expanded from Hong Kong, China, to 20 countries and regions. Its investment totaled ¥1.99 trillion, and ¥693.302 billion from 222 RQFIIs was approved.
“The complete removal of quota restrictions this time is the Administration’s major reform to further liberalize the financial market and promote all-round opening up. This move will further satisfy the demands of foreign investors,” said Wang Chunying, Spokesperson and Chief Economist of the Administration. As mainstream indices such as MSCI, FTSE Russell, S&P Dow Jones, and Bloomberg Barclays are now incorporating and increasing the weight of China’s stocks and bonds, foreign investors are more eager to join the country’s financial market.
From now on, qualified investors, once registered, can bring in their investment for eligible securities. With such facilitation, China’s stock and bond market will be further accepted by the world.
According to Wang, the complete removal of restrictions will make cross-border investment in securities more convenient and is expected to attract more long-term capital from other countries.
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